Will help boost liquidity and returns for fund management groups, hedge funds, family offices
Omada Capital, the leading independent investment manager and family office services provider specialising in private equity and asset management, is pleased to announce the launch of its ground-breaking stock-based lending service, which allows clients to secure loans against the broadest range of listed shares and on flexible market terms.
The launch follows a successful trial of the service with selected clients, over the past five months, with some £35 million of loans disbursed backed by some £55 million of share collateral. The service is now being officially launched and will include bonds as well as equities and be rolled out to a much wider potential client base.
Omada is looking to significantly increase the scale of its stock-based lending service, with a new business target volume of between £250 million to £270 million over the next 12 months. The company expects HNWIs, family offices and private wealth managers to account for a significant more than 50% of the borrowers with Treasurers at Emerging Markets and Growth Businesses etc making up the balance.
Omada offers an attractive 45-75% loan to value depending on market capitalization and liquidity of the stock and has few restrictions on the type of listed equities accepted as collateral – so far it has accepted shares listed on exchanges as diverse as the Philippines, Turkey, Israel, AIM, Nasdaq, India, as well as Global Depository Receipts.
If the value of the collateral bonds or shares falls below the loan value the client has the option of either topping up the value of the collateral, or walking away and assigning outright the collateral backing the loan to Omada – there is no recourse to any other shares or financial assets in a client’s portfolio unlike other stock-based lending or broker share margin-lending services.
The minimum term of the loan is usually 36 months and clients are not restricted to using the funds to invest in financial assets and indeed have full discretion to use the money as they see fit, for instance buying property or funding their businesses.
Omada provides the loans through the backing of a leading Canadian asset management firm with around £6 billion equivalent of assets, which it manages for a broad range of clients, including local city pension funds, family offices and alternatives funds.
Risk management is undertaken by Omada’s own investment committee, which has the advantage of having access to the Canadian firm’s highly sophisticated risk assessment systems.
The service is most suitable for a range of potential clients. These include investment and alternative funds such as hedge funds that have prime brokers who operate severely restricted stock-based lending policies, family offices and HNWs, who are keen to realise some cash from their stock portfolios without selling the shares.
Through the launch of this new stock-based lending service, Omada is capitalising on the withdrawal of numerous major banks and financial institutions from a number of asset markets including property and shares. There is a strong demand for alternative sources of funding in these areas and Omada and other alternative providers are moving into these markets to improve liquidity and funding options.
Peter Hellman, Co-CEO of Omada Capital, commented:
“We are delighted to launch what we believe to be the market’s most straightforward and flexible stock-based lending service. Lending on stocks is a potential source of additional returns for family offices, traditional fund management and hedge fund groups and other bond and share based investment businesses. As such it helps to promote economic activity and we are pleased to play a role in helping to spur economic growth and accelerate the recovery.”
Shahram Shoraka, Co-CEO of Omada Capital, commented:
“Many banks and brokers have either withdrawn from this type of stock and bond based lending or considerably restricted the funds they dedicate to this area. This has caused difficulties for a broad range of family offices and investment businesses. Through our service we hope to inject fresh liquidity into this area and give these companies and institutions access to a robust and extremely flexible funding option.”
For more information, visit: http://www.omadacapital.com/.