Obtaining immediate access to capital – to buy a property or car, fund a business venture or diversify an investment portfolio – can be onerous and time-consuming. As a Sanlam Private Wealth client, you have the option of using your equity portfolio to secure finance or arrange a short-term guarantee. The service is fast and flexible, and offered at highly competitive rates.
Investors needing quick capital to grab what could be an unmissable opportunity often find themselves having to liquidate an investment portfolio in order to sidestep the cumbersome and sometimes drawn-out process of applying for a bank loan. But market conditions may not be particularly conducive to selling, and there is the added disadvantage of capital gains tax (CGT) being triggered when assets are sold.
Our equity-backed finance offering provides an efficient opportunity for our clients to access immediate finance without having to cede fixed property or sell a portfolio. You may need bridge funding or working capital for a particular project, or you may want to make use of our equity-backed finance offering to buy a house instead of taking out a mortgage loan from a bank.
Alternatively, you may have a concentrated single stock position and wish to build a diversified portfolio. For example, a JSE-listed company director may have a need to diversify offshore but could be reluctant to sell the shares of the company of which they are a director because it would trigger a significant CGT event. The transaction would also need to be reported on the Stock Exchange News Service (SENS) and could send the wrong signal to the market.
BENEFITS OF EQUITY-BACKED FINANCE
Fast access to capital. Should you have a short-term cash-flow need, our equity-based finance option will enable you to:
Take advantage of investment opportunities
Avoid unnecessary tax implications if you sell shares
Retain an optimal portfolio mix without having to liquidate your portfolio.
Portfolio diversification. You can leverage your existing portfolio to invest in alternative stocks or offshore investments, providing a natural rand hedge to your South African investment portfolio.
An alternative source of business funding. If you own a business, our equity-backed finance facility allows for more cost-effective funding for:
Seed capital to start a business – you won’t have to use private equity or venture capital
Short-term working capital needs – you may need to fund income-enhancing assets.
Peace of mind and portfolio continuity. Your existing mandates remain in place and your assets continue to be managed by a team you know and trust.
The assurance of real-time pricing. You are informed of your risk at all times, and we can react immediately to changes that may affect the value of the assets provided as collateral for the loan.
A highly competitive rate. The rate we offer is linked to the prime interest rate and is competitive with the best in the market. We keep our margins tight as our main focus is to provide a service to you. There are no origination, service or cancellation fees.
Flexible repayment terms. Interest is capitalised from day one, as long as you don’t breach a predetermined level. The loan can be repaid at any time (it is not locked in), without penalties. The interest rate is linked to the prime interest rate.
Easy administration. Our facility is simply structured as an addendum to an existing investment mandate, which can be obtained directly from your wealth manager.
HOW DOES IT WORK?
You can use your existing equity portfolios as collateral for a loan. The top 100 companies by market capitalisation listed on the JSE, selected listed international investments, unit trusts, exchange-traded funds and bonds qualify as collateral.
The amount you can borrow depends on the level of diversification, volatility and liquidity of the shares in your equity portfolio. The value of your portfolio is monitored on a daily basis, and as long as your loan – as a percentage of the value of your portfolio – remains below a predetermined level, there are no collateral requirements.
If your loan (including unserviced interest) exceeds this predetermined level, additional collateral will be needed.
The predetermined level also depends on the level of diversification, volatility and liquidity of the shares in your equity portfolio.
The minimum portfolio required to act as collateral is R1 million. There is no requirement to service the loan. Interest is calculated daily using the outstanding balance and capitalised monthly.
The criteria used to determine the interest rate charged include the size of the portfolio, the duration of the loan and the quality of the collateral offered (for example, the concentration, liquidity and volatility of the instruments in the portfolio).
If you’d like to make use of Sanlam Private Wealth’s equity-backed finance offering, please contact your portfolio manager.
We can assist you with
Discretionary investment management
Sanlam Private Wealth manages a comprehensive range of multi-asset (balanced) and equity portfolios across different risk categories.
Our team of world-class professionals can design a personalised offshore investment strategy to help diversify your portfolio.
Our customised Shariah portfolios combine our investment expertise with the wisdom of an independent Shariah board comprising senior Ulama.
Outsourced investment service
We collaborate with third-party providers to offer collective investments, private equity, hedge funds and structured products.
Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.