Private debt and asset financing
Private debt provides companies with flexible, bank-independent debt financing that can offer an interesting option for a wide range of industries, company sizes and financing purposes. Such financing can be based on both assets and cash flows. Capital providers here are usually institutional investors such as specialised private debt funds, family offices or insurance companies.
Advantages
- Customised, extremely flexible financing
- Quick decision-making; fast implementation
- No need for banks or capital markets
- Suitable for medium-sized companies of any credit-rating class
- Generally offers more leverage (financing leverage on the operating result / EBITDA) and thus financing volume from a single source
- Valuation expertise for (depreciated) assets of any kind
Whether term-based, rolled-up interest or collateralised – private debt is available in a wide variety of forms. We support you not only in finding the right private debt provider but also in customising the financing package and its volume to your needs. Please feel free to contact us.
Flexibility is standard with private debt. The range of options extends from senior or subordinated collateralised loans to equity-related mezzanine or profit-participation capital through to silent equity. For example, a temporary suspension of interest payments, higher leverage compared to banks or a flexible covenant can all be agreed with lenders – depending on what makes most sense for your company. Terms of one to eight years are typical. Repayment is often made in full only at the end of the term (bullet financing).
Loans usually start at around five to ten million euros, but amounts of several hundred million euros are not uncommon. Loans are typically granted by just one lender. This is in contrast to traditional bank financing, where financing is often provided jointly by a group of banks in a “club deal”. However, a bank may be involved in order to provide a liquidity line (current account).
Lenders are usually specialised private debt funds, insurance companies or other institutional investors such as family offices and pension funds. Among private debt funds, there are also specialists who have expertise in certain corporate situations such as insolvencies and restructurings or other special cases. In such situations, private debt providers with a focus on assets can play a key role. They are able to value a wide range of (depreciated) assets in-house and lend accordingly. Banks can generally only do this for property. “Hard” assets such as machinery and inventories or intangible assets such as brand rights can be used as a basis for financing. Many private debt funds see themselves as a financing partner that can not only bridge the gap in the short term with asset financing but also commit to the company in the long term.