Listing on the Frankfurt Stock Exchange and accessing financing through a Securitized Bond Offering
In order to securitized assets, they need to be cash flow producing. Public company shares are considered cash flow producing, in addition, a company’s sales revenue, mortgages, royalties, and payments being made to a company are ongoing cash flow, all which is insurable and bondable. In today’s economy it is not enough just to insure cash flow, securitization generally requires the packaging and pooling of assets to achieve a higher rating acceptable to institutional markets in Europe. Thus, firms listed on the Frankfurt Stock Exchange can utilize their shares and assets pooled into a securitized bond for funding.
The process looks as such:
Frankfurt Stock Exchange Listings are vital for funding the company, without the listed shares, the institutions would not make the investment. The Bond requires both listed shares and the cash flows to give the additional security required to give a AA rating and guaranteed rate of return of 10%.
In addition to the financing required, the firm gains:
- The notoriety of being a publicly listed company
- The funds required to run their business successfully
- Access to additional capital through the public markets
- Entry into institutional investors without a costly Prospectus or IM
- Real capital in 9-10 weeks, not Equity Lines and Pass-Through investments than never formulate
The Costs Involved With The Process
- The company requires up-to-date financials
- A third party valuation
- A listing on the Frankfurt Stock Exchange
- Due Diligence
- The Insurance and Issuance from the Originator
- Capital raised (Optional, as firms can often raise their own)
The cost of these items dictate the cost of the entire process to access up to 5 million euro in financing for your firm.
Companies are required to base their own expense third party valuations, commissions to brokers and the insurance firm, and auditors if required.
Why is this the number one way to finance a firm?
– It takes on average 8-10 weeks
– The company doesn’t dilute itself
– The investment for investors is insured
– All the required capital comes in a single tranche versus overtime
Don’t have a project to securitize yet? Don’t worry, list the company first so that you have half of the equation covered, it will make it easier to securitize if you have the ready made public company. Once you have the right target acquisition or revenue streams, create the Bond. This is also a very useful method for acquisition financing.