Services - Structured Finance

Structured Finance

Need complex funding solutions? Enter structured finance – a way to design flexible financing solutions that reduce the risk profiles of investments while improving liquidity.

At Hilton Smythe, we work hand-in-hand with you to build tailored structured finance solutions, helping you to design cash flow structures, risk profiles, and repayment priorities that seamlessly integrate with your business model.

What is Structured Finance?

Structured finance is a financial instrument leveraged for complex financing needs, and is generally characterised by the pooling of assets, trenching of the liabilities backed by the asset pool, and dissociation of the credit risk from the pool of collateral assets.

It allows companies to borrow by using their cash flow as security rather than using physical assets as collateral.

For businesses with risky investments, structured finance acts like a safety net for investors by improving the risk profile of the investment. It may, for example, involve adding on legal protections to an investment that alter the composition, payout order or credit risk of the receivables backing the investment.

Use cases for structured finance:

LBOs
Leveraged Buyouts (LBOs) offer financial entities a strategy to acquire a target company by using debt financing without significant equity investment. This approach allows buyers to leverage the acquired company’s assets and future cash flows to secure additional funds for the purchase, potentially exceeding the available equity capital.

MBOs
A subset of LBO transactions, the financing source of a Management Buyout (MBO) is a combination of debt and equity.

Project financing
Project finance is a solution for financing large-scale infrastructure, industrial, and utility projects. This structured financing approach relies on a non-recourse or limited recourse model, where repayment of the debt and equity used for the project originates solely from its projected cash flows. In other words, the lender primarily looks to the project’s own revenue generation potential for repayment, with project assets, rights, and interests serving as secondary collateral.

Advantages of structured finance

Improved risk management. Pooling assets spreads risk among multiple investors, reducing the impact of defaults.
Improved liquidity. Structured finance improves companies’ liquidity, in part by transferring risk from sellers to buyers of the structured products.
Highly customised financing solution. Structured finance allows for tailored cash flow structures and risk profiles, taking into account project-specific factors like asset composition.

Benefits of seeking structured finance with Hilton Smythe:

This is not just another loan. Our structured finance services deliver a strategic partnership, where we work hand-in-hand with you to:

Build tailored financing solutions: We help you to design cash flow structures, risk profiles, and repayment priorities that seamlessly integrate with your business model.
Securing optimal terms: Our understanding of the structured finance landscape allows us to navigate complex deals and negotiate terms that align with your goals, minimising costs and maximising value.
Attract diverse investors: We tap into a wider pool of potential investors, identifying those who resonate with your unique story and are eager to partner in your success.

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Over 35 years experience
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Completely independent
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Honest Advice
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Tailor-made solutions

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