Private ou plublic placement to raise capital
Capital can be raised by the issuance of bonds through private or public placement. This practice allows entrepreneurs to attract capital without giving away equity.
Bonds
Bonds can be issued by a company, or a holding entity and may bear fixed or variable interest. Bonds may also be structured through a securitisation vehicle (such as a securitisation company or a securitisation fund). In this case the financial instrument offers investors exposure to the income stream of a receivable or other asset. The securitisation undertaking may issue units/shares, certificates or bonds.
The securitisation vehicle acquires or assumes risks (either directly or through another entity) by issuing transferable securities (in bearer or registered form) the value and yield of which reflects the risks linked with the underlying asset/risk.
Regulated and non-regulated vehicles
The securitisation fund might be a regulated or non-regulated vehicle.
A non-regulated vehicle will not fall under regulatory approval and supervision of the CSSF (the Luxembourg financial services regulator)as long as it does not issue securities to the public on a continuous basis, and it does not issue securities with a value of less than EUR 100,000 and more than three times per year (these two conditions are cumulative).
Shares or bonds issued by such unregulated securitisation undertaking may be offered to institutional and qualified investors. Private individual investors, who subscribe for a minimum investment amount in excess of EUR 100,000 are also eligible.
Subscribers to the fund's units or bonds are presented with a subscription form and a private offering memorandum. The subscription form, together with information about the identity of the investor and the origin of funds is provided to the management company of the fund. Upon approval, subscription proceeds can be wired to the bank account of the securitisation fund and the fund units or bonds are issued. Banks can subscribe fund units and bonds under a nominee account in the fund register. With the ISIN code, the securities can be deposited in the client bank account.
Bearer Securities
Bearer securities (notes) can also be issued. Income streams or redemption amounts are transferred from the fund's compartment bank account to the investor's bank account. Such bonds may be accepted under a clearing system and may also be listed on the Luxembourg Stock Exchange or any other foreign market.
It only takes a few days to set up a securitisation fund. However, the creation of the management company and drafting of the investment memorandum typically can take two to four weeks. Once the fund is set up, a subscription period can be defined.
Please find more information about our Securitisation services on our dedicated website: luxembourg-securitisation.com
Read also:
