The Benefits of the Collateral Transfer Provider

When a private equity firm or other types of funding institutions make an investment into companies on an international platform, several laws come into play. If an equity company made an investment (or indeed a loan) into a company outside of their own jurisdiction (i.e. they physically lent funds in a different country), they may need Government permissions, licenses and other forms of financial authority registrations in that jurisdiction in order to make such investment or lending commitment.

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Bank Guarantee ‘Lease’ or StandBy Letter of Credit Providers

A Provider is the party who enters the Collateral Transfer Contract (or the Collateral Transfer Agreement, “CTA”) with the Principal or Recipient. A Provider will typically be a private equity firm, a hedge fund or wealth manager or indeed a family office, managing funds on behalf of their clients or investors.

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In what form is “Collateral” injected?

Collateral Transfer facilities are commonly, and more importantly, are wrongly referred to as Bank Guarantee ‘leasing’ as this document will explain. Despite, the injection of capital or collateral is made by the Provider to the Recipient via the Issuing Bank and the Recipient Bank, there is actually never any mention of the word ‘lease’ or ‘rent’….

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How does Renewal Work and the costs

How does renewal work and what are the renewal rates / costs? Collateral Transfer facilities are issued for 12 month periods and multiples thereof. However, most facilities are offered initially as 12 month contracts with an option to renew for a further 12 months (year on year), up to a maximum of 60 or 72 months…

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