Tag: News

European Equity Investors Go Small

Written by Daniel Terry on . Posted in Industry, News & Reports.

Despite the fact the economic outlook looks gloomy across the European Union, the low valuations of European small and mid-cap stocks have caught the eye of many an investor, as their relatively low valuation has ignited long-term interest. Whilst recent banking upheaval promoted thoughts of a credit crunch, and recent anxieties regarding an economic slowdown favoured “defensives over cyclicals” *, the smaller European companies have seen valuations sink.

*Defensive stocks are those companies that are recognised to have defensive earnings, that do not really equate to the economic cycle. Such companies usually supply necessities that consumers will not cut back in times of a downturn in the economy. These necessities are typically power, such as electricity and gas, healthcare and certain foodstuffs. 

 *Cyclical stocks are those companies that are recognised as being more exposed to the economic cycle. Thus, when economic conditions are on a downward cycle, these companies are likely to see a drop off in earnings, but if economic conditions are on an upward cycle, then conversely earnings will increase. Such companies are recognised as being in the travel, construction and luxury goods sector.

Many European focused investors suggest that while the current economic slowdown persists, the current price of SMIDs (Small-Mid Capitalisation), have already had much of the risk factored into their price. The thinking therefore is that should Europe enter into a prolonged recession, SMIDs will have less downside than the larger companies or stocks.

In the AI (Artificial Intelligence) sector, breakthroughs in generative AI (algorithms that can be used to create new content such as images, text, simulations, video and audio), have in recent months kept investors focused on mega-stocks. However, from an AI angle those SMIDs that have available resources to invest in AI will hold an advantage over those who lack the same resources.

Expert analysts suspect that European economic data will get worse over the next three months especially as data recently released shows the EuroZone suffering from a technical recession, where there has been negative growth in real GDP in two consecutive quarters. When the data shows an economic upswing across the EuroZone, the revival of small caps will begin, and the same analysts suggest that this will provide a rich hunting ground for those long-term focused investors.

Interest Rate Hike of 0.5% by the Bank of England 

Written by Daniel Terry on . Posted in Industry, News & Reports.

On Thursday 22nd June 2023, defying market predictions, the Bank of England put up interest rates by a full half percentage point, to 5%, the highest level since 2008. Both the Prime Minister Rishi Sunak and the Chancellor of the Exchequer Jeremy Hunt backed the Bank of England to the hilt, confirming Andrew Bailey’s (Governor of the BOE) uncompromising attack on inflation. 

Apparently recent data showed that there were stronger inflationary pressures on the UK economy, thus the Bank of England’s Monetary Policy Committee (MPC) voted seven to two to increase interest rates by 0.5%. The Bank of England is committed to their policy of reducing interest rates to 2% by raising interest rates 13 times since December 2021.

The Bank of England’s expectation that inflation would fall in May failed to materialise with inflation staying at 8.7% well beyond and above the intended target of 2%. Many experts and analysts are suggesting that the rate rises are doing more harm than good and figures confirm that inflation in the UK is the highest of any G7 country.

Such interest rate increases have pushed lenders to reprice their “Fixed Rate” mortgage deals pushing up prices whilst at the same time putting increased pressure on homeowners, which may result in a swathe of repossessions. The Chancellor, having already announced there will be no help for homeowners, did a u-turn on Friday and announced an agreement with lenders where homeowners struggling with repayments would be given a 12 month grace period before any repossessions take place. This agreement encompasses mortgage holders extending their current agreement or moving to an interest only plan.

Due to interest rate increases, the circa two million mortgage holders on tracker rates have seen their monthly outgoings rise every six weeks since December 2021. UK data shows that there are six million households tied to fixed rate mortgages with 800,000 due at the end of the year 2023. We can only hope the Government’s and the Bank of England’s monetary policies can finally start to eat away at inflation avoiding a mortgage time bomb at the end of 2024.

Finance for Mining

Written by Jenny Bowler on . Posted in Industry, Mining, News & Reports.

Investing in Sustainable Mining

The International Finance Corporation (IFC), aids mining operations across the globe via various finance methods, focusing on mitigating social and environmental risk. It is hoped that come 2023 – 2024 that the amount of debt (bonds) and equity investment will increase in the mining sector, especially from green financing as they reduce their carbon emissions and adopt new technologies.

Start-up mining is the high end of risk in the mining sector, followed closely by junior miners. Some venture capital firms are looking at start-ups and junior miners who are offering more sustainable and environmentally friendly mining opportunities. The use of new technology such as data analytics combined with new sensor technology help understand the many variables a start-up or junior miner is confronting.

Raising Capital in the Mining Sector via ICS

At IntaCaptial Swiss we have provided many financial services and advice to our impressive list of clientele – ranging from bond issues, mergers and acquisitions, structured finance, IPO’s and acquisitions, as well as raising capital through the means of Collateral Transfer.

We demonstrate the ability to provide access to loans and lines of credit utilising our financial model, the Collateral Transfer Facility. Collateral Transfer as the name suggests is the transfer of collateral from one company to another. In this instance, to provide access to credit facilities, the collateral is a Demand Bank Guarantee.

Collateral Transfer and Mining

Many mining companies, big, small or aspiring may not have heard of the term Collateral Transfer. This is probably because the term used in everyday life is Leased Bank Guarantee, which is technically incorrect but has become embedded in the everyday global “financial speak” when referring to Collateral Transfer.

For a company to obtain a Demand Bank Guarantee they must sign a contract referred to as a Collateral Transfer Agreement with a Provider. Providers tend to be sovereign wealth funds or hedge funds, who because of the return, are happy to lend part of their balance sheet into the Collateral Transfer market.

IntaCapital Swiss work hand in hand with many providers and are therefore able to offer companies who are unable to find credit facilities access to Demand Bank Guarantees.

Over the years, IntaCapital Swiss has facilitated corporate loans for many mining ventures across the globe. The funding has benefited many aspects of mining, ranging from the discovery of precious metals to raising capital to purchase machinery for extraction processes and the infrastructure involved. We welcome companies seeking capital to grow their projects, whether that be expansion to another country or increasing operation, to get in touch. Our financial advisors will explain the requirements and the processes involved to raise the capital your project needs.

The mining industry as a whole is involved in the extraction of various geological materials such as iron ore, copper, gold, silver, aluminium, platinum, palladium, chromite, lead-zinc, coal, bauxite and various precious stones such as diamonds and emeralds. The three most-mined minerals in order are coal, iron ore and bauxite.

Mining finance will differ from mine to mine as there are five different types of mining. These types of mining are classified as Mountain Removal, Highwall Mining, Dredging, Open Pit Mining, Strip Mining and underground mining. We will deal with each individual type of mining, followed by an overview of global mining finance.

The Monetisation Process

To explain the monetisation process in further detail… In the world of Demand Bank Guarantees, the format or verbiage contained therein dictates the end use of the instrument. For example, it could be a customs guarantee where the verbiage confirms that customs duties will be paid in the event the applicant, (the company requiring the goods from customs and deferring duty to a later date) will be paid.

Therefore, when a Demand Bank Guarantee needs to be monetised it will contain verbiage that’s is absolutely precise so that lenders know they are 100% covered in the event of default by a borrower. All Demand Bank Guarantees are payable on first demand, which means in the event of a non-repayment, the lender can claim from the issuing bank, by producing the requisite documentation showing the lender is in default.

Hence, a company with a Demand Bank Guarantee on their account, can request credit facilities from their bank, offering the Demand Bank Guarantee as security for a loan or line of credit. It has been known for banks to refuse a loan application where a Demand Bank Guarantee is being offered as security.

On the odd occasion when a loan or credit line is refused, IntaCapital Swiss can make available third-party lenders. These lenders are happy to take the place of the beneficiary’s bank and make available credit facilities using the Demand Bank Guarantee as security.

Mountain Removal Mining

Mountain removal mining (MTR), also known as mountaintop mining (MTM), can be found at either the summit or the summit ridge of a mountain. The overburden is removed in order to access the mineral, in this case mostly coal, below. The overburden is referred to as material, rock etc that lies above what is known as an area that can be economically exploited. If the overburden cannot be replaced, it is moved to neighbouring valleys, which are referred to as valley fills or holier fills

The main source of finance for mountain removal mining came from banks. Many well-known banks financed this form of mining, Barclays Bank, BNP Paribas, Wells Fargo and JP Morgan to name but a few. However, strong pressure from environmentalists and harsher regulation in the mining industry stopped this controversial mining sector in 2015 as banks pulled finance and mining companies withdrew from mountain removal mining.

Highwall Mining

Highwall mining is where underground mining and surface mining are linked together by extracting minerals in open-pit mines from the exposed horizontal seams. This form of mining is achieved through a mobile system which utilises a continuous miner controlled by an operator. A retractable conveyor system is utilised together with a vertical conveyor that readies and stacks the coal for onward transportation.

Dredging

Dredge mining or dredging is a process whereby placer deposits are excavated by utilising floating equipment. Placer deposits or placers are desirable and valuable minerals. They are usually formed during the sedimentary period from a source rock. Examples of dredging equipment that remove placer are the bucket-line or the bucket-ladder.

A bucket-ladder is the process of removing deposits from a riverbed or any waterbed by utilising a series of buckets that are mounted on an endless loop. They scoop up materials from the waterbed, which are accordingly deposited on a barge via a chute.

Open-pit Mining

Open-pit mining, also referred to as opencast mining, is recognised as a surface mining technique. It is the process whereby minerals are extracted from an open pit in the ground. This type of mining is utilised when commercially viable mineral deposits are found close to the surface. To identify where the deposits are located, probes holes are drilled into the ground then their locations transferred to a map.

A typical version of an open-pit mine that can be seen in everyday life is a quarry. Many of the deposits are used as aggregate for construction purposes. The largest open-pit mine in the world is the Bingham Canyon Mine located in Salt Lake City, Utah, USA. This produces copper, and is over 1.2km deep, and about 4km wide.

Strip Mining

Strip mining is the process whereby a thin strip of overburden located above a desirable deposit is moved and dumped behind the deposit. Once the deposit has been removed or mined, a similar second trip is created and that overburden is dumped into the first strip. This process continues until all the deposit has been mined.

Underground Mining

All the above definitions of mining are related to above-ground mining. Underground mining is utilised when desirable deposits, (such as coal), are far too deep for surface mining techniques. In order to extract or mine the deposit miners open shafts or portals that will intercept deposits such as coal seams. The deposits are removed and conveyed to the surface by conveyor belt. The entry to an underground mine from the surface is usually via a tunnel referred to as a decline, adit or shaft.

Currently the deepest mine in the world can be found south-west of Johannesburg in South Africa and is known as the AngloGold Ashanti’s Mponeng gold mine. Currently the depth at which this mine has reached is in excess of 4km. The second deepest mine is also located in South Africa in Gauteng Province. Referred to as the Driefontein Mine, this mine has reached depths of 3.42km.

Mining Finance

Mining finance is highly specialised and banks and other financial institutions dedicate whole departments or subsidiaries to financing this sector. Mining takes place all over the world from South America to Africa, to Canada, the USA and Australia. Therefore, approval committees for loans and investments into the mining industry will not only have to look at the borrower’s historicals, balance sheets and business plans, but for certain countries, they will analyse political risk and any other country factors that may impact the lending/investment process.

There are many investors and lenders in the mining industry. Such investors/lenders are banks, hedge funds, sovereign wealth funds, private equity funds, vulture funds and venture capital to mention but a few. Today, London remains the global centre for raising capital for investment in the mining industry, where there is easy access to both retail and institutional finance. The industry’s global representative body, the International Council on Mining and Metals (ICMM), is based in London, along with British firms Anglo American and Rio Tinto. Non-UK miners who also base themselves in London are the Swiss conglomerate Glencore, Polymetal (Russia), Antofagasta (Chile), and BHP (Australia).

These companies make up the biggest mining companies in the world and because of their size and balance sheets can raise capital direct from banks or bond issues in the capital markets. However, how do the smaller mining companies and start-ups obtain financing?

Financing Mining Start-ups and Junior Miners

Access to capital from banks by mining start-ups and junior miners is almost non-existent. Therefore, many of these miners have turned to those companies financing larger miners, hedge funds, sovereign wealth funds, state-owned agencies, export credit agencies and private equity. Also, since banks are not funding this sector, specialist mining funds have appeared, which like all funds have an internal hurdle that the client has to clear.

In order to clear this hurdle, the fund will offer debt and some alternative financing like royalty financing. Royalty financing is where the lender signs a contract with the miner, giving them in return for an up-front loan or payment, a percentage of the production or revenue stream. In essence it has replaced the debt/equity lending so favoured in the past.

There is a start-up fund in South Africa that is investing in local mining projects – The New African Mining Fund (NAMF), which is a closed fund with a 10-year life cycle. The first six years is the commitment period with returns being seen thereafter. The fund will accept up to USD 175 million. Once production has started, owners can look for expansion capital (if needed), from the above-mentioned sources.

Conclusion

For over a decade IntaCapital Swiss has been working hand in hand with providers so that companies who are being refused loans and lines of credit by their bankers and other financial institutions, can access credit facilities through the use of Demand Bank Guarantees

IntaCapital Swiss can proudly boast a high success rate with those companies that have passed due diligence. If you are a mining company that requires a capital injection or needs finance to start a new mine, and you have been refused credit facilities, contact us today. Remember, utilising Demand Bank Guarantees to access credit facilities does NOT dilute equity.

Aviation Collateral Transfer

Written by Jenny Bowler on . Posted in Aviation, Industry, News & Reports.

IntaCapital Swiss in the Aviation Industry 

For over a decade we have been providing access to capital for companies who are finding it difficult to raise loans and lines of credit from traditional sources. 

Our dedicated management team at IntaCapital Swiss have a unique knowledge of global markets. Our most popular financial product, which is in constant demand is our Collateral Transfer Facility. This facility has provided cash-starved companies across the globe access to fresh capital be it a loan or lines of credit. 

Aviation Collateral Transfer 

What is Collateral Transfer? To many companies who have not heard of Collateral Transfer, they may well have heard of leased bank guarantee, which is a very common phrase used in finance circles daily. However, Collateral Transfer is the correct technical wording for leased bank guarantee, which is the transfer of a Demand Bank Guarantee from one company to another. 

If a bank refuses to underwrite the cost of a private jet for a company, then IntaCapital Swiss can offer access to the necessary capital to purchase the aircraft. IntaCapital Swiss have a database of Providers, usually hedge funds or private equity funds who are happy to provide Demand Bank Guarantees to the Collateral Transfer market. 

Those companies looking to raise capital (referred to as a beneficiary), will after successful due diligence, be asked to sign a Collateral Transfer Agreement with a provider. They will have to pay a fee to the provider for the use of a Demand Bank Guarantee which is commonly referred to as the Collateral Transfer fee. Once the fee has been received the provider will instruct their bankers to transfer a Demand Bank Guarantee to the account of the beneficiary. 

Financing a Demand Bank Guarantee  

A Demand Bank Guarantee can be used for many purposes such as an advance payment guarantee or a customs guarantee. Many companies are unaware that a Demand Bank Guarantee can in effect be turned into cash via a loan or line of credit. 

The International Chamber of Commerce ICC was set up many years ago to assist in cross border trade and finance. Now based in Paris, it has over 40 million members, including banks in over 200 countries. Whilst not law, the rules and regulations laid down by the ICC are adhered to by all members, including rules for Demand Bank Guarantees.  

A Demand Bank Guarantee is subject to the verbiage contained within the format. Therefore, for a Demand Bank Guarantee to be used as security for a loan or a line of credit the verbiage must be so precise that any lender will be completely covered in the event of a default. The rule the ICC has laid down for Demand Bank Guarantee is known as the Uniform Rules for Demand Bank Guarantees, (URDG 758) and all banks adhere to this rule. 

Once the Demand Bank Guarantee has been applied to the beneficiary’s account, they may request a loan or line of credit from their bank offering the Demand Bank Guarantee as a security for any credit facilities that may be granted. The bank now has a Demand Bank Guarantee as collateral for the loan, and the company may now go and buy the requisite aircraft. The provider will lien the aircraft in the event the Demand Bank Guarantee is called. 

Conclusion 

Since the global pandemic started the airline industry has lost an estimated USD118 billion net. Most of 2020 saw airlines going out of business, some being restructured, rentals being deferred, government bailouts and debt raising. Many banks have withdrawn from financing the aviation market; thus, capital markets have become a vital source of cheap financing especially to lessors who were known to raise funds in the bond market in early 2021. 

The general feeling is that purchases of aircraft are going to decline while leasing of aircraft will increase. This is due to the elevated level of borrowings that airlines are currently enduring, which effectively impacts their capital expenditure. 

Whatever the state of the aviation market IntaCapital Swiss stands ready to help in securing new capital for clients, be it through Collateral Transfer or indeed syndicated loans which is yet another option available to their clients. 

Media and Entertainment Funding

Written by Jenny Bowler on . Posted in Industry, Media and Entertainment, News & Reports.

Here at IntaCapital Swiss, we have worked with many corporates across the globe who sought financial funding for their projects – with several being in the media and entertainment industry. We have enabled our clients to access capital/Lines of Credit via the means of our bespoke Collateral Transfer Facility, which has propelled business plans into reality.  

Typically, the process for obtaining capital via our Collateral Transfer Facility will start with the appointment of one of our Client Relationship Managers, who will ensure due care and attention throughout the process. Our CRMs assist every step of the way and provide the necessary details and terms of any facility applied for, whilst co-ordinating with our Finance Team to facilitate applications to competition.  

So, what is Collateral Transfer? It’s the delivery of assets from one party – a Provider, to another – the Beneficiary, often in the form of a Demand Bank Guarantee. At IntaCapital Swiss we have built a worldwide network of Providers, allowing us to bring together both Providers and our clients/beneficiaries. Once the Beneficiary has received the Demand Bank Guarantee, they now have a bankable asset on their accounts. This allows the Beneficiary to confidently approach their bankers with a request for credit facilities, offering the Demand Bank Guarantee as security.  

On occasion, bankers refuse or reject credit facility applications, despite being offered first-class security. However, in addition to issuing Providers, IntaCapital Swiss are able to supply alternative or third-party lenders who will lend against a Demand Bank Guarantee.  

IntaCapital Swiss and the Media & Entertainment Industry 

Over the past decade, we have helped to facilitate many projects that fall within the media and entertainment industry. Our Client Relationship Managers have assisted with providing funding for hotel construction, clubs, leisure facilities, golf courses, TV & film production, cinemas and many more. An example can be found in Europe, where we secured a Collateral Transfer agreement for €36 million for a hotel and casino development, wishing to expand their facilities within three major cities.  

IntaCapital Swiss are in the unique position of being able to provide access to capital and Lines of Credit to those companies who can present viable business plans, with strong exit strategies in place. With this opportunity, companies across the world can expand their businesses, whilst having the security of an assigned CRM throughout the entire process. To learn more on how we can help raise capital for your next project, get in touch today. Our professional team will be in touch within 24hrs to provide tailored advice and the next steps to move your application forward.

Construction Funding via Collateral Transfer

Written by Jenny Bowler on . Posted in Construction, Industry, News & Reports.

At IntaCapital Swiss, we facilitate funding for many construction projects across the globe – ranging from supporting the purchase of materials, equipment, land acquisition to general construction costs. With our expert team of financiers, we are able to offer new projects immediate working capital, subject to passing our due diligence, whether they fall under commercial, residential, infrastructure or leisure.

Typically, companies will obtain bank loans for their projects, and sometimes funding from private equity (PE), Venture Capital (VC) and in some cases, from sovereign wealth funds. However, with increasing restrictions and criteria to be met by banks, companies are seeking funding from elsewhere. Those who have strong business plans could benefit from our financial facility, Collateral Transfer. This facility makes use of Bank Guarantees which are utilised as collateral or security to obtain loans and lines of credit from banks and non-traditional lenders. However, construction companies wishing to benefit themselves from the Collateral Transfer Facility will have to produce a viable business plan with a strong exit strategy. 

IntaCapital Swiss SA, Geneva  

IntaCapital Swiss are in the unique position of being able to make finance available to those construction companies who have had their project funding applications rejected by banks and other financiers such as venture capital and other private equity funds.  

Collateral Transfer 

Collateral Transfer is the process where a company, the Provider, lends or leases a Demand Bank Guarantee – usually for a period of one year, to another company, the Beneficiary. For the use of this financial instrument, the Beneficiary will pay the Provider a Collateral Transfer Fee.

Collateral Transfer has been around for many years and has especially come to the fore in the last decade. Collateral Transfer has often been mistakenly referred to as Leased Bank Guarantee – whilst this is technically incorrect, it has become recognised as an everyday saying when referring to Collateral Transfer. 

A Demand Bank Guarantee if written correctly is a guarantee that can be effectively turned into cash, by using the asset as a security to obtain loans and lines of credit, often referred to as credit guarantee facilities. This Demand Bank Guarantee will contain specific wording enabling a lender to offer credit facilities knowing they are 100% covered by the security. A Demand Bank Guarantee is governed by ICC Uniform Rules for Demand Guarantees, (URDG), 758 and is payable on first demand. 

How does a Construction Company Obtain a Demand Bank Guarantee? 

IntaCapital Swiss have a wide network of Providers who can provide Demand Bank Guarantees for Collateral Transfer in return for a Collateral Transfer Fee. The Beneficiary (construction company), and the Provider will sign a contract provided by IntaCapital Swiss referred to as a Collateral Transfer Agreement. Once this agreement has been signed and the Collateral Transfer Fee received, the Provider will instruct their bank to transfer the Demand Bank Guarantee to the beneficiary’s bank, for credit to their account. 

Once the Demand Bank Guarantee has safely arrived on the Beneficiary’s account, the construction company can approach their bank, and confidently present their credit facility application, offering the Demand Bank Guarantee as security. The bank should have no qualms about lending against such excellent security. 

However, from time to time, some banks decline to lend against a Demand Bank Guarantee for reasons only they will know. In such instances, IntaCapital Swiss has relationships with third-party lenders. Such lenders, lend against Demand Bank Guarantees and will often fill the lending space vacated by the bank. 

A bonus for arranging credit facilities through the Collateral Transfer Facility is that these facilities are debt-funded. In other words, the construction companies will lose no equity when agreeing to use a Collateral Transfer Facility to raise capital for their projects. 

Construction Projects funded by IntaCapital Swiss and Collateral Transfer

Over the past decade, IntaCapital Swiss has been involved with facilitating the capital required to fund projects worldwide, such as…

  • Hotels/Resorts and Hospitality, including shopping complexes
  • Residential Properties
  • Education Facilities, such as universities
  • Sea Ports
  • Mining Facilities
  • Infrastructure, such as roads, rail, airports and energy plants.

Each project has experienced our first-class management team, who have great experience of the construction industry, following any accepted project finance application all the way through to fruition. To learn more about our case studies, please visit here or get in touch today and one of our advisors will offer tailored advice, suited to your business plan.

Conclusion 

Any construction company can apply to IntaCapital Swiss for project finance providing they have an acceptable business plan with a strong strategic exit strategy. If the company passes all the due diligence tests, IntaCapital Swiss will be able to arrange funding for the full cost of the project utilising their highly popular Collateral Transfer Facility. 

Real Estate

Raising Capital for Real Estate Ventures

Written by Jenny Bowler on . Posted in Industry, News & Reports, Real Estate.

There are three types of real estate, Residential Real Estate, Commercial Real Estate, and Industrial Real Estate. As the underlying values and business all differ from one sector to another, it follows that financing for these three separate sectors will differ as well. Here at IntaCapital Swiss, we have facilitated many real estate projects across the globe. We explain how we facilitate such projects via the means of Collateral Transfer – raising capital or credit for businesses to push forward with their planned projects. Read on to understand more detail or get in touch with one of our financial advisors today for bespoke information, tailored to your project.

Residential Project Finance 

Residential project development can take differing forms, from pulling down existing buildings for a rebuild, purchasing land for residential development, expanding development next to existing properties and renovation of properties that are run-down. 

Developers looking to fund the above projects will look to secure residential real estate development loans or investments. Critical to the success of a residential project is choosing the appropriate financial model as there are many financing options available for residential construction. 

There are several specialist companies, (property investment firms) that provide loans /investment for smaller and larger property developments. Banks provide straight secured debt. Larger projects are funded by venture capitalists, private equity funds, vulture funds, senior family offices and hedge funds with either a debt-equity split or straight equity funding. In some cases, a bank may provide debt funding on a syndicated basis if the loan amount is of significant value and the client is considered as a “blue chip”. 

Finance can be made available from the start to the finish of the project. This means that the lender/investor will finance the purchase of the land, finance the construction of the project to turnkey, and finance the marketing operations. In another case, the developer may already own the land and may just require construction finance.  

In other cases, the developer may suffer a liquidity problem halfway through construction and will seek funds so they may complete the project. If there is no significant debt and the developer has self-funded the build, a bank may well offer debt financing and as security take a lien over the land and buildings. Other finance on offer will be straight equity investment or a debt/equity split from the companies mentioned above. 

Commercial Real Estate 

As opposed to residential real estate, which is used solely for domestic home inhabitancy, commercial real estate is property (land or buildings), that will generate a profit either from business activities, capital gain or rental income. Commercial real estate is generally broken down into six categories, 

  • Office Buildings  
  • Apartment Buildings 
  • Restaurants and Retail  
  • Healthcare 
  • Land 
  • Industrial 

Financing Commercial Real Estate Projects 

Commercial real estate is designated as an income-producing property, and as can be seen from the above there is an array of different income-producing properties. As such, the finance will differ from category to category 

Finance for commercial real estate projects is usually made to business entities both small, large or conglomerate. Such entities can be corporations, developers (again both small and large), limited partnerships and on occasion trusts.  

There are many types of business loans for commercial real estate projects such as lines of credit, term loans, equipment financing, construction loans and bridging loans. These of course are generally debt loans, but for more sophisticated investment/loans, these can be debt/equity splits, straight equity financing and sometimes government grants or loans. 

Banks are very big into commercial property finance, but so are the specialist financiers such as commercial real estate development funds, private equity funds, vulture funds, hedge funds, sovereign wealth funds, venture capitalists and private investment companies. The private equity giant Blackstone was at the end of 2020, declared the world’s largest corporate landlord by devoting USD163 billion of equity capital to commercial property on a global basis. 

Financing Industrial Real Estate Projects 

Industrial real estate project finance is supplied by the exact same lenders/investors as set out in commercial real estate. Many of the bigger projects such as refineries, steelworks etc, will take a longer period to start turning a profit. The companies being financed for such projects are usually conglomerates, so a debt only package is usually utilised with a bi-annual interest rate, with the land and construction being secured by the lender.  

Brownfield Site 

These are large industrial sites that are scheduled for demolition. Such sites such as refineries will be demolished, and the land and subsoil cleaned of any pathogens. The land is usually designated for sustainable commercial and residential development. This is particularly attractive to developers as they can build homes, supermarkets etc on the land.  

Therefore, diverse funding will be needed across the board. There will be a mixture of debt, debt/equity, straight equity finance for the different builds that will take place upon the land. In some cases, specialist Brownfield Funds will finance much of the project, leaving the remaining funding to banks and other lenders/investors. 

IntaCapital Swiss and Real Estate Funding 

We can give access to credit facilities to those companies being denied by banks and other traditional financial institutions, as well as the non-traditional financiers and more exotic lenders and investors. 

Located in the heart of the financial district in Geneva, Switzerland, we can offer our clients highly motivated and exceptionally skilled financial managers and consultants. We offer an array of financial products and solutions, from mergers and acquisitions, private bond issues, securitisation and IPO’s to mention but a few. 

However, the jewel in the crown is our Collateral Transfer Facility, a financial product that has gained in popularity over the last decade in Europe, the Middle and the Far East, Asia and South East Asia, the Pacific Basin and parts of the African Continent. 

Collateral Transfer 

Collateral Transfer is the process whereby one company, referred to as a Provider, will transfer an asset or collateral, usually a Demand Bank Guarantee, to another company, known as the beneficiary 

Essentially IntaCapital Swiss will match Providers with those companies, (Beneficiaries) who need credit facilities. The provider and beneficiary will sign a contract, a Collateral Transfer Agreement, whereby the provider agrees to transfer a Demand Bank Guarantee to the beneficiary for one year, (or longer) for a fee. This fee is known as a Collateral Transfer Fee. 

Real Estate Projects – providing applicants, (beneficiaries), can prove they own the land on which the build is to take place, plus have a successful history in completing real estate projects, IntaCapital Swiss, subject to successful due diligence will be able to provide access to credit facilities in the amounts of Euros/GBP 10,000,000 – 150,000,000. 

Demand Bank Guarantees 

Whilst there are many bank guarantees in circulation, the one guarantee that can be monetised is the Demand Bank Guarantee. Demand Bank Guarantees come under the purview of the International Chamber of Commerce, ICC who set the standards and rules for international trade which includes Demand Bank Guarantees.  

Whilst, not law, all the 45 million members in over 100 countries adhere to these rules and regulations including most banks. The particular rule that is applicable to Demand Bank Guarantee guarantees is the ICC Uniform Rules for Demand Guarantees, (URDG), 758.  

URDG 758 states that all Demand Bank Guarantees verbiage will dictate their end-use. In the case of monetising, a Demand Bank Guarantee the verbiage will be so precise that any lender will immediately know they are 100% secure. Under this rule, Demand Bank Guarantees are payable on first demand. 

Monetising a Demand Bank Guarantee  

Once the Collateral Transfer Fee has been paid and the beneficiary has received the Demand Bank Guarantee on their account, they have a financial instrument that can be monetised. The beneficiary can now present a credit facility application to their bankers offering the Demand Bank Guarantee as security.  

Conclusion 

Any companies that have real estate development projects, be it industrial, commercial or residential, and are unable to get funding, are able to benefit from IntaCapital Swiss financial services – subject to due diligence. IntaCapital Swiss have been providing access to finance for over a decade and are one of Europe’s leading specialists in this area. 

Sports Stadium

Project Funding for the Sports Industry

Written by Jenny Bowler on . Posted in Industry, News & Reports, Sports.

How does the sports industry obtain finance? This is a complex question as there are multiple avenues to explore. Due to the high number of sport types, funding will differ across the industry.  

Typically, in the UK, premier league football acquires revenue from team owners, sponsorship, entertainment and media contracts, merchandise, ticket sales and football funds. This is similar within the rugby field too, however often on a smaller scale. Cricket differs from the above as funds are generated from mostly match ticket sales and membership fees.  

When it comes to international sporting events, these often include other forms of funding. The UK Olympics for example is funded by a government department, UK Sports – focusing on providing Olympians with a salary. The International Olympic Committee also funds a large part of the budget – USD 1.5 billion went towards the 2016 Rio de Janeiro Olympic Games. Other events such as the FIFA World Cup is both government and private sector funder. Often, the largest beneficiary of the funding/investments is transport infrastructure and construction of sporting facilities.  

Alternative Sports Funding 

Here, at IntaCapital Swiss, we can offer those within the sports industry access to business capital by the means of Collateral Transfer. Those looking to build, expand or upgrade their sports clubs or facilities across any of the sectors can benefit from our financial services.  

What is Collateral Transfer and how can it raise capital for your business? This financial facility is not new, and in fact, is becoming increasingly more popular. As the name implies Collateral Transfer is the transfer of an asset, in this instance a Demand Bank Guarantee, from one company to another. We have a network of companies that supply Demand Bank Guarantees for Collateral Transfer – recognised as Sovereign Wealth Funds, Hedge Funds, Private Equity Funds. These are referred to as Providers. The Provider transfers a Demand Bank Guarantee to the account of the beneficiary (company seeking capital) in return of a Collateral Transfer Fee. 

Once the beneficiary has received the Demand Bank Guarantee on their account, they can with confidence approach their bank and present their application for a loan or line of credit, often referred to as Credit Guarantee Facilities. In most cases, the bank will happily approve this application, as they are being offered first-class security in the shape of a Demand Bank Guarantee. 

From time to time a bank will reject a credit application despite the offer of a Demand Bank Guarantee as security. In this instance, IntaCapital Swiss will be able to provide alternative lenders or third-party lenders who will replace the bank and lend against a Demand Bank Guarantee. 

To conclude 

The sports industry is complex when it comes to funding. However, there are alternatives available, which IntaCapital Swiss can facilitate. Over the years, we have facilitated project funding for new sporting facilities, club buyouts, golf courses and several other ventures. Collateral Transfer has become increasingly popular worldwide as it enables companies to obtain credit facilities when other financial institutions have rejected their applications.  

At IntaCapital Swiss, we are Europe’s leaders in facilitating Collateral Transfer, so if your business requires project funding get in touch today. Our team of financiers and client relationship managers will offer advice, and should your business plan pass due diligence, a designated CRM will see your application through to fruition. 

Precious Stones

Financing within the Precious Stone Industry

Written by Jenny Bowler on . Posted in Industry, News & Reports, Precious Stones.

Here we examine the financing of precious stones or gemstones from mining to markets. However, before we start, what is the difference between precious stones and semi-precious stones? The distinction between precious and semi-precious goes back to ancient Greece and today precious stones are recognised as diamonds, sapphires, rubies and emeralds. All other gemstones are recognised as semi-precious.  

Financing Precious Stones  

Many of the larger mining companies can self-finance their mining operations, such as De Beers and Rio Tinto. Operations are financed from their own balance sheets or from banks and other traditional financiers.  

In the diamond industry banks have been providing more than USD12 billion to the diamond midstream. This post-mining finance is made available from rough diamonds through to cutting, polishing and onto jewellery wholesaling. Thus, the whole supply chain is financed from mining to the shop window. Similar finance can be found in other mineral markets. 

But what about the start-ups and the smaller miners known as junior miners? Most banks and traditional financiers risk models and compliance will negate any lending to these companies, who must search for alternative finance. 

However, there are specialist funds that now look at investing in these miners, as well as several hedge funds or private-equity funds. These alternative lenders are likely to engage with the mining company if they are in possession of approved documentation showing that valuable deposits of precious stones are held within their concessions. 

  • Junior Miners – These companies may already have a mine ready to go with proof that precious stones are in abundance within their concession. There are a few options available. The most common is a joint venture, usually with a reputable miner where there will be a division of profits. 
  • Mid Cap Miners – Some of these companies may already be mining precious stones and need capital to expand their operations. Again, there are a few options available through alternative finance options. 
  • Streaming and NSR’s (net smelter returns) – Funding can be made available through the sale of part or all the future mine production. Future production is sold at a discounted rate in exchange for a percentage of future profits and in return, the miner will receive an up-front payment.  
  • Net Profits Interest (NPI) – This is where miners can receive an up-front payment by selling a fixed percentage of mining profits. The particular form of finance is usually available after capital costs have been paid.  

So, what happens if no finance is made available to the smaller miner? Do they pack up and go home? Many miners in the past have done exactly that. However, this is where IntaCapital Swiss can help. We have enabled access to finance for many companies on a worldwide scale – who have been denied access to investment, loans, and lines of credit.  

IntaCapital Swiss   

IntaCapital Swiss have been providing access to investment and credit facilities for over a decade. Based in the financial district of Geneva Switzerland, we are Europe’s leading exponents of Collateral Transfer. Many companies who have been unable to secure finance for their business plans have, through the expertise of IntaCapital Swiss, been able to secure capital investment and credit facilities. 

Collateral Transfer 

Many companies may not have heard of Collateral Transfer, probably because it is incorrectly referred to as Leased Bank Guarantees. However, as the name suggests this is the transfer of assets from one company to another. IntaCapital Swiss offer their highly popular Collateral Transfer Facility which utilises Demand Bank Guarantees, which enable the recipients of this asset to obtain financing. 

IntaCapital Swiss have a database of companies, referred to as Providers, who offer Demand Bank Guarantees to the Collateral Transfer market. Companies looking to raise capital finance will sign a contract with the Provider, a Collateral Transfer Agreement, to receive a Demand Bank Guarantee. These companies are referred to as the Beneficiary and they will pay a fee to the Provider, referred to as a Collateral Transfer Fee for the use of the Demand Bank Guarantee 

Monetising Demand Bank Guarantees 

Once the beneficiary has signed the Collateral Transfer Agreement and paid the Collateral Transfer Fee the Provider will instruct their bank to transfer the Demand Bank Guarantee to the account of the Beneficiary.  

The Beneficiary now has first-class security sitting on their account. The Beneficiary can now apply to their bank for a loan or a line of credit offering the Demand Bank Guarantee as security or collateral. In this case, the bank will be happy to lend against this asset as they know they are 100% covered should the Beneficiary/borrower default on their fiduciary duties. 

Why Demand Bank Guarantees? 

Demand Bank Guarantees are one of the few financial instruments that can be monetised. This is because the verbiage contained within a Demand Bank Guarantee controls the end-use of the instrument. For example, a Customs Guarantee is a Demand Bank Guarantee and  

Customs will know they will be paid should a customer default on paying the revenue owed.  

Similarly, a Demand Bank Guarantee that will be monetised is written in such a way that any lender will understand that they are totally covered should the borrower default on repayment. It is important to note that Demand Bank Guarantees are governed by ICC Uniform Rules for Demand Guarantees, (URDG), 758 and are payable on first demand. The ICC stands for International Chamber of Commerce and all banks abide and adhere to their rules and regulations which include Demand Bank Guarantees.  

Conclusion 

Any precious stone mining company that has an operational mine and are struggling to obtain finance should look no further than IntaCapital Swiss. They are assisting companies all over the world to obtain finance where finance has been denied by the more traditional financiers and the alternative finance options.  

In the world of mining precious stones, finance and investment in this market have been declining over the last decade. Therefore, those precious stone miners outside of the recognised Big Miners – who have little difficulty in securing finance, who struggle to obtain the necessary finance for their business plans, should look no further than IntaCapital Swiss. 

How do I get a Line of Credit?

Written by Jenny Bowler on . Posted in Collateral Transfer, News & Reports, Raising Lines of Credit.

For those of you unsure of what exactly a Line of Credit represents, here is a brief description… 

A line of credit is a predetermined amount borrowed from a bank. The loan may be used for a variety of pre-agreed purposes. Unlike a standard loan a line of credit is revolving. In other words, the borrower can keep borrowing up to the credit limit even if they have made repayments.

Applying for a Line of Credit

When a line of credit is applied for, the lender will be requested to fill out copious amounts of forms. The essential details will be how much, the expiry date and the reason(s) for the line of credit. All the documents will be accompanied by an extensive business plan, which must contain a strong exit strategy. This is very important regarding the lender’s due diligence. A strong exit strategy will show the bank that their line of credit can be repaid on the due date.

In most cases a bank will offer a secure line of credit. This means the company will be asked to provide collateral or security to the lender. Once the collateral has been agreed and approved, the client will be made a formal offer.

Due Diligence

Due diligence forms a major part in obtaining a line of credit. The company’s accounts will be gone over with a fine-tooth comb. Updated World checks and Dunn and Bradstreet checks will be carried out on all directors.

Cash flow projections will form a significant part of due diligence. The company must show sufficient cash flow that will allow the Exit Strategy to come into play.

Despite all the above, banks continue to decline loan or credit applications. Banks have been cutting their loan books or they have been kept static for many years. You may find this article somewhat annoying to say the least. 

If a company has their loan application rejected what do they do?

Alternative Funding for a Line of Credit

Here in Geneva, many companies have turned to Collateral Transfer to obtain lines of credit. Not just Swiss companies, but companies from Europe, India and Pakistan, The Middle East, the Far East and S/E Asia.

IntaCapital Swiss are Europe’s leading exponents of Collateral Transfer and are based in Geneva. They have been successfully providing access to lines of credit for over a decade. Their clients are companies that have had their loan applications rejected by their banks and other traditional lenders.

What is Collateral Transfer?

Collateral Transfer is the means by which one company “leases” a financial instrument to another company. The most popular instrument is a Demand Bank Guarantee as this is the only guarantee that can be monetised. Once monetised by a lender the beneficiary of the Demand Bank Guarantee can obtain a line of credit.

If a company wishes to obtain a line of credit utilising Collateral Transfer, they must sign a contract with a Bank Guarantee Provider. The contract is referred to as the Collateral Transfer Agreement. The process is quite simple but IntaCapital Swiss will carry out the same due diligence procedures as banks and other financial institutions.

There has been a significant increase in the number of companies applying for Collateral Transfer, especially during the Pandemic. Collateral Transfer has been around for years but it has now become a significant medium for accessing a line of credit.

Companies suffering cash flow problems and rejection by their banks and other lenders should contact us today, to discover the opportunities that Collateral Transfer can bring to corporates around the world.

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