For investors, timing is everything – especially when opportunities arise and short-term liquidity is needed. But selling assets or navigating a bank’s loan process can involve time, tax implications and unnecessary complexity. As a Sanlam Private Wealth client, you can instead use your investment portfolio to secure fast, flexible equity-backed finance or arrange a short-term guarantee without having to sell your assets – and at highly competitive rates.
Investors may from time to time require quick capital to grab what could be an unmissable opportunity. To sidestep the cumbersome and sometimes drawn-out process of applying for a bank loan, you may find yourself having to liquidate an investment portfolio or repatriate cash held offshore. However, if market conditions aren’t in your favour, you could be locking in returns, triggering capital gains tax (CGT) when assets are sold, or having to reapply to externalise funds.
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.
It can also be useful if you have a concentrated single-stock position and want to build a more diversified portfolio. A director of a JSE-listed company, for example, may want to diversify offshore but be reluctant to sell shares in their own company because doing so 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.
Why consider equity-backed finance?
Fast access to capital. If you have a short-term cash-flow need, equity-backed finance can allow you to:
- Take advantage of investment opportunities
- Avoid unnecessary tax implications from selling shares
- Retain cash offshore
- Maintain your ideal investment mix in your portfolio.
Portfolio diversification. You can leverage your existing portfolio to invest in alternative assets or offshore opportunities, providing a natural rand hedge to your South African investment portfolio.
Flexible funding for business needs. If you own a business, this facility offers a more cost-effective way to fund:
- Seed capital – without relying on private equity or venture capital
- Short-term working capital – for income-enhancing assets or growth initiatives.
Confidence in continuity. Your assets remain under the care of a team you 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.
Highly competitive rates. Our pricing is linked to the prime rate and benchmarked competitively. With no hidden fees – no origination, service or cancellation charges – your costs stay lean.
Flexible repayment terms. Interest is capitalised from day one, provided you don’t breach a predetermined level. The loan is not locked in and can be repaid at any time without penalty.
Easy administration. The facility is simply structured as an addendum to your existing investment mandate.
How does it work?
- You can use your investment portfolio – including JSE Top 100 stocks, select global investments, exchange-traded funds, unit trusts and bonds – as collateral. Offshore cash may also qualify. Retirement funds are excluded.
- Loan values are based on portfolio diversification, liquidity and volatility. As long as your loan remains within the agreed limit, no additional collateral is required. If the loan value exceeds this threshold, additional assets may be requested.
- The minimum portfolio required to act as collateral is R1 million. There is no requirement to service the loan. Interest is calculated daily and capitalised monthly.
- Loan terms and rates are tailored to your portfolio’s size, the loan duration and collateral quality (for example, the concentration, liquidity and volatility of the instruments in your portfolio).
Equity-backed finance is a simple way to stay invested, while still remaining agile. Wealth is personal – your financing options should be too.
If you’d like to make use of Sanlam Private Wealth’s equity-backed finance offering, please contact your portfolio manager.
