Posts in Category: Loan

Equities First Holdings Obtains a New Office in Melbourne

Equities First Holdings LLC located their new Australian headquarters to the heart of Melbourne. The new location is on Collins Street and the it is much more spacious than their previous office. Their new office will give them room for expansion and they hope that it is much more welcoming for their clients. They currently have other offices in Sydney and Perth. They also have stretched their company internationally to Britain, Hong Kong, Switzerland, Singapore, Thailand and their main office in The United States of America. Their current headquarters is located at 10 West Market Street in Indianapolis, IN.

Equities First Holdings provides loans to be used in the securities markets and they accept stock market shares as collateral. Because of this, they are considered to be an unusual, alternative lending institution. They mainly take on clients with very high net worth and they do not normally provide financing for retail based businesses. The company was founded in 2002 and they boast the fact that they have provided over $1.4 billion in financing. The company is heady by Al Christy Junior along with Vincent DeFilippo as their Chief Executive for their Asian offices. Their staff had increased by 50 percent since 2012 and their yearly growth has steadily been 30 percent.

EFH is one of the few financial institutions left that deal with lending in the securities industry. Many banks and other traditional lending organizations have closed their doors to clients, so EFH had swooped in on this opportunity. Their company is rapidly gaining traction within the finance industry and is one of the biggest stock based lenders in the world.

Their acceptance of stocks as collateral is very innovative and potentially carries less risk than a traditional margin based loan. Individuals that are expert traders can pul their investment out of the market instantly before things go south, allowing them to pay the loan back with minimal losses. During the duration of the loan, they maintain a fixed interest rate. If the borrower’s stock depreciates, they are still able to keep the original loan amount.

“During a typical three-year loan term, market fluctuation is inevitable, but stock-based loans provide a hedge because the borrower is lowering his or her investment risk in a downside market,” said Al Christy in a Yahoo Finance Interview earlier this year.

Both stock-based loans and margin loans have similarities. They both are able to take stock as collateral for their loans. There also happen to be very different in a few critical aspects.

Margin loans are more like traditional bank loans, and they have to be used for a very specific purpose. Unfortunately, banks may liquidate the borrower’s stock collateral without any warning or consent. The loan-to-value can also vary drastically at 10 to 50 percent.

The users of stock based loans can walk away from the deal without losing the loan amount, and the lender will keep the stock even if it has been depreciated. The interest rates are usually only three to four percent. The loan-to-value rates can be between 50 to 75 percent.

Just like any type of loan, there will always be risks involved for both lenders and borrowers. In EFH’s experience, they have found that stock based loans have had very little risk for both parties. Lenders in the past had ruined stock based loan deals by promptly dumping the borrowers’ collateral before the stock had reached maturity, and neglecting other aspects of the transaction. They have been able to have widespread success due to their ability to provide low risk investments. They have high quality legal, regulatory, and trading institutions to advise them to make their loan decisions. To minimize risk, their offices only consider those who are classified as sophisticated, expert financial investors.

In September of 2014, they acquired Meridian Equity Partners in the United Kingdom. The name of their new branch is Equities First London Limited. This was one of their most recent and major acquisitions in the company’s history and they aim to maintain and expand to more global locations. James Mungovan now deals with the client in the United Kingdom under this new division.

Equities First has a staff professionals with a deep understanding of the financial market. Their Chief Risk Officer is Simon Moore, who has over 20 years of experience in global derivative and structuring. Julie LaPoint is the Director of Operations; she oversees all accounting matters and deals with due diligence for new clients. Their Director of Trading is Joe McCarthy, who deals with their global trading and hedging strategies. Joe Thoe, who has several years in financial advisory for many large companies, is their Director of Production. They have many other high profile professionals within their ranks. You may find a full list of their staff on their official website.