How Private Securities Lending Supports (U)HNW Professionals

Introduction

In the world of private wealth, there’s a paradox at play. The wealthier you become, the harder it often is to access liquidity. For many high-net-worth and ultra-high-net-worth individuals, capital is concentrated in private equity, pre-IPO holdings, and business stakes—assets that are valuable on paper but stubbornly illiquid in practice.

Selling those assets to release cash can be costly. It may trigger tax events, erode long-term upside, or undermine a founder’s influence. Fortunately, there’s another path: borrowing against your private shares.

What is Private Securities Lending?

Private securities lending—also referred to as securities-backed lending or unlisted stock loans—is a form of structured finance that allows shareholders in private companies to raise capital by using their equity as collateral. It offers the liquidity of a sale, without losing ownership or upside potential.

This type of facility is particularly attractive for founders, early-stage investors, and family offices whose portfolios include large stakes in private companies, but who wish to:

• Acquire property
• Fund new ventures
• Settle tax obligations
• Restructure debt
• Rebalance portfolios

Unlike loans secured against listed stocks, there’s no public market price. Lenders assess the shares based on company fundamentals, governance, legal transferability, and the realistic likelihood of a liquidity event—such as a buyout or IPO.

Why Now?

The global growth of private credit has made this strategy increasingly mainstream. According to Preqin, over $1.7 trillion is now allocated to private debt markets globally. Lenders, family offices, and funds are seeking non-bankable collateral in pursuit of better returns—and unlisted shares, if properly structured, fit that bill.

Estimates suggest over $35 billion is loaned annually against private equity stakes. And with interest rates stabilising and venture markets maturing, lenders are more open than ever to well-structured, short-duration lending secured against private company shares.

The Benefits for HNW and UHNW Clients

Liquidity Without Dilution

Borrowing allows you to retain full ownership of your shares—and the rights, control, and potential upside they represent. For founders approaching an IPO or shareholders awaiting a strategic acquisition, that flexibility is priceless.

No Forced Tax Events

Loan proceeds are not typically treated as taxable income, meaning you avoid crystallising capital gains unnecessarily. It’s a way to fund your next move without giving up hard-earned value.

Speed and Discretion

Provided documentation and valuation are in order, deals can complete in under 30 days. Structures are discrete, private, and tailored.

Bespoke Terms

Unlike bank lending, these deals are structured around your objectives—not rigid underwriting rules. Interest-only, bullet repayments, and non-recourse terms are all possible.

What Lenders Actually Look For

This is not a retail product. It’s a structured, negotiated facility—and lenders are meticulous. Based on case studies and real-world criteria, here’s what they will assess:

1. Ownership & Documentation

You must clearly prove that you legally own the shares, free of encumbrances. Expect to provide shareholder agreements, articles of association, and full cap tables.

2. Valuation Support

Lenders will reference recent funding rounds, audited financials, or third-party valuations. If there’s a credible pre-money valuation, they may lend up to 40–65% LTV.

3. Transferability

Can shares be pledged, transferred to a security SPV, or held in escrow? Restrictions can limit lender recourse and reduce appetite.

4. Liquidity Path

They want a reason to believe they’ll be able to exit the asset. A planned IPO, internal buyback scheme, or secondary transaction market strengthens the deal.

How Much Can You Borrow?

Loan-to-value (LTV) ratios typically range from 20% to 40% of share value. In stronger cases—credible companies with upcoming exits or audited valuations—LTVs can reach 50–65%.

Interest rates usually start at SOFR + 5-6% per annum but vary based on jurisdiction, asset type, and structure. Facilities are often structured over 12–36 months, and many are interest-only.

Risks to Weigh Up

This is still a secured loan, and as with any debt facility, there are risks:

• Valuation Sensitivity: If the company underperforms or market sentiment shifts, the lender may request additional security.
• Loss of Collateral: In a non-recourse structure, default could mean losing the pledged shares.
• Legal Restrictions: Some companies impose strict limitations on pledging shares—especially if co-founder consent is required.
• Market Dependency: If your equity relies on an uncertain IPO, the structure must include contingency planning.

We work with clients to assess whether the terms align with their broader financial goals. For some, a sale may still be the right answer. For others, private lending is a bridge to even greater upside.

Your Next Step

To assess whether private securities lending is viable, you’ll need to gather:

• Confirmation of share ownership
• A recent valuation or funding round summary
• Company financials and governance documents
• Shareholder agreements (especially pre-emption rights or tag-along clauses)
• Purpose of the loan (to inform structuring and exit planning)

We support clients through every stage—from discovery and document readiness to sourcing the right lender and negotiating terms that work.

Why Clients Work With Kingsbury & Partners

 Our team understands the intersection of wealth, governance, and credit. We work discreetly with shareholders, family offices, trustees, and professional advisers to ensure our clients get both liquidity and long-term control.

• HNW experience across Europe, the UAE, and UK
• Access to specialist lenders with appetite for complex equity
• Legal, risk, and structuring support included
• No-nonsense assessments—if the deal’s not right, we’ll say so

Conclusion: Liquidity Without Sacrifice

For many high-net-worth individuals, private company shares represent more than just capital — they reflect years of effort, belief in a vision, and alignment with long-term value creation. Selling too early, or under pressure, undermines that.

Private securities lending offers a measured alternative. It allows you to access liquidity — without giving up your position, your upside, or your legacy. Whether you’re funding a new opportunity, consolidating your affairs, or simply rebalancing your liquidity profile, borrowing against private equity can provide a bridge between where you are and where you're going.

The key is getting the structure right.

At Kingsbury & Partners, we help HNW professionals navigate this space with confidence — from documentation and valuation through to lender negotiation and execution. If you hold private equity worth over £5 million and would like to explore what’s possible, we’re ready when you are.