Financing Model
By allowing clients to borrow against their illiquid, private stock and other private assets, PCA's credit facilities provide borrowers with an alternative to traditional sources of capital. In general, financing from PCA can be compared against, or considered as a part of an overall financing strategy which includes, raising outside equity (whether PE or VC), subordinated debt at an operating company, or selling an asset. In most cases, PCA's loan facilities would not compete with senior debt at the operating company level. While much of the loan facility terms are tailored, personal guarantees are required.
Summary of Typical Terms
While much of the terms of our loans are tailored to the specifics of the individual and transaction, a general outline is highlighted below.
Borrower(s)
Individual(s), or special purpose vehicle (incl. holding company), w/ a guarantee from the individual(s)
Amounts
$2 million minimum loan amount
Maturity
1 to 6 years
Collateral
Illiquid assets such as private equity or other ownership interests in private companies, ownership interests in real estate, limited partnership interests, or other illiquid private assets.
Rate
Cash interest coupon payment; plus a back-ended component based on the future value of one or more assets. This is designed to minimize the current cash cost of the loan while aligning our interests with the borrower.