Case study

Private equity client

This information is for intermediary use only.
This case study is for illustrative purposes only.

Case study highlights

Client

Private Equity House partner earning £780,000 per annum.

Need

Flexible solutions to release funds from an existing property.

Challenge

Design a lending solution whereby the client could get immediate funds to invest alongside the firm’s funds and into an alternative private investment. Client required the facility immediately.

Outcome

An Investec Revolving Mortgage secured by client’s main residence.

Background

Our client has an immediate requirement for a flexible solution so they could release funds from an existing unencumbered property for investment purposes. Limit required of £2.5m to be secured against an unencumbered Central London property valued at £3.8m.

Private equity client

The Key Challenge

The key challenge for the private banker is to design a lending solution whereby the client could get immediate funds to invest alongside the private equity firm’s funds and into an alternative private investment.

Several challenges were presented to the private banker:

  • The client required flexibility to make ad hoc payments online to cover business and personal expenses.
  • The client has an irregular income profile whereby he receives large lumps of income from realised carry alongside a smaller monthly draw.
  • There was an extremely short timescale to complete in order for the client to take advantage of upcoming investment opportunities.

The outcome

Following a thorough exploration, an online Investec Revolving Mortgage was structured as:

  • It provides the client with the flexibility to draw and repay the mortgage as and when lump sum payments are received from carried interest or when investment opportunities arise, and
  • Is particularly useful for clients who receive a large portion of their income on an irregular basis, enabling them to reduce their mortgage and redraw when any potential liabilities or investment opportunities arise.
  • The mortgage is arranged within two weeks of contacting the bank, facilitating the release of funds for the client’s investments.

Deal highlights

£2.5m

Limit required to be secured against the client's main residence

2.54%

Over Investec Base Rate (the interest rate is applied on a daily basis)

5

Year term

66%

Loan-to-value

To ensure the mortgage remained uncomplicated, the private banker helped the client set up direct debits on the mortgage account (rather than the client’s current account) to pay day to day expenses and an online facility to make payments up to £20,000 to cover any smaller ad hoc payments.

The client has access to draw larger funds when investment opportunities arise via his dedicated private banker.

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