Finding the right financial strategy is the key to business growth. Choosing the appropriate financial structure, the best sources of capital, and the right financial strategy can accelerate profits and growth in a business considerably. Thus, it is very important to emphasize a sound financial strategy.
For developing a strategy, one needs to understand the fundamental dynamics of the business sector and what type of finance solution is suitable and feasible for the company. In that context, a robust business strategy should be developed. With these, the chances of success would be seemingly soaring. Structured Finance is one such preferred financial instrument that becomes an essential part of such crucial business strategies in large businesses.
Structured finance is a highly effective finance technique that primarily caters to large companies or institutions whose experience with conventional finance products has not satisfied their complex financial needs and goals. These financial instruments are designed for large corporations to revive from severe asset risks.
Unlike the conventional financing methods, structured financing deals with various financial lending instruments that usually mitigate risks concerning complex assets. Small enterprises opt for traditional tools like mortgages and small loans. On the contrary, large enterprises with bigger borrowing capacity require structured finance to meet their financial needs.
Structured finance assumes importance because of the involvement of large parties like banks and other financial institutions. Large investment banks and financial institutions such as us participate in the making and use of structured finance. The sums that are made available for circulation in the economy through the structured financing process are massive. Structured finance is such a financial tool that can help companies restructure their debts, make savings on repayments, and free up working capital. More so, it is often useful when a company operates in different jurisdictions and undertakes trade on a global platform. This popular financial instrument has made its mark in corporations, governments, and financial intermediaries to manage risk, develop financial markets and expand business reach.
They are pre-packaged investments that normally include assets linked to interest and one or more derivatives. Structured finance products are designed in such a manner that they help in meeting unique risk-return objectives. A Structured Finance product can be in several forms. Lets understand that in a little more elaboration.
A structured finance analyst studies and analyze financial data of companies, stocks and assist companies in coming up with new investment opportunities. Structured financial analysts help companies raise capital by creating securities before selling them to investors. They take responsibility for tracking the financial performance of companies and market conditions for preparing periodic reports which help senior management of a company take strategic decisions accordingly.
Banks usually carry out a proper evaluation of specific projects assessing the debt requirement and availability of capital before deciding on granting loans. The track record of the borrowing firm is of utmost importance for establishing eligibility for availing structured finance. The assessment which the banks carry out is kept separate from sponsors and other initiatives and only after the successful evaluation is the finance granted.
Before financing, banks prefer that there is a solid mechanism in place for risk mitigation and hence it forms a special purpose vehicle ( SPV) for differentiating the investment both legally and financially from its promoters/sponsors.
Collaterals offered while availing structured financing can be of two types- tangible security such as a debt against a property and contractual guarantee. Contractual guarantees are given more preference while obtaining loans from the banks to assure that the project would generate perpetual cash flows.
An investment bank plays a major role in funding large businesses that require an enormous amount of capital influx. Thus structured financing comes into play. An important feature of structured financing is that it is non-transferable, unlike traditional finances or loans. Structured financing is done on a project-to-project basis based on the requirements, structure, and nature of the project. The other advantage of structured financing is that it offers numerous benefits for corporations and businesses for increasing their business reach and handling risks besides helping them in devising new financial instruments to meet their upcoming obstacles. By transferring risks from sellers to buyers, the liquidity of the corporation’s financial portfolio improves to a large extent that impacts the cash flow positively.
Known for rapid urbanization and economic prosperity, Gurgaon has huge potential and a market in itself for structured financing. With a very good track record of successful deals and expertise to manage processes efficiently we at Resurgent India Limited provide solutions related to debts and structured financing to satisfy the financial needs of big and mid-corporate clients apart from small and medium enterprises. Our eclectic mix of data-driven market knowledge and experience, make us a promising choice when it comes to Structured Financing. We assist corporates in raising funds through various debts instruments that are tailor-made to help you achieve the desired outcome. Our seasoned team of analysts and investment experts can make accurate financial projections and co-create efficient structured financing plans closely mapped with your financial needs and goals.