The borrower

One client was a senior managing director and founding partner at a mid-market US private equity fund that invests in communications, energy transition and transportation. The  borrower’s wealth was held as co-invest and carry in the fund, which was due to be divesting over the term of the mortgage.

 

The problem

The client’s remuneration was in US dollars and had been inconsistent over the last four years. In particular, their bonus income had significantly grown in the last two years due to the increasing level of the client’s seniority, responsibilities and performance.

One of the client’s goals was to maintain liquidity for future investments into the fund and therefore they wanted to purchase a property with a relatively low level of deposit.

With the majority of the client’s assets being held as speculative income (carry), Investec had to undertake detailed analysis of both the firm and the funds to confirm affordability, including understanding the various stages of the underlying funds’ lifecycle. The client’s investment in the funds and therefore their carry, formed part of the eventual repayment strategy for the mortgage.

 

The solution

Investec was able to offer the client an initial high LTV of 80% over a 12-year term allow the funds to mature and divest. The loan was provided on an interest-only basis, with scope to reduce the loan to value over the term of the mortgage to enable the client to invest into the fund.

 

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