Alexander Christodoulakis is an International Financier, and as CEO of PBS SA Capital Group is the lead investment executive who manages an international portfolio of companies. PBS SA Capital oversees a comprehensive global portfolio of company-group asset holdings in markets, ranging from transport, shipping, and energy to other industrial sectors.
Delivering calibrated financial solutions, the group encourages asset and solid enterprise growth. Alexander also fulfills merchant and investment banking functions and is experienced in stock market listings and secondary listings worldwide. One of a number of financial services that PBS provides is asset-based financing and international asset-based business loans.
Asset-based lending is a form of commercial financing (business loan), which is secured by assets that can be used as collateral. This loan, or line of credit, can be secured by assets such as commercial or personal real estate, machinery, and equipment, land, inventory, banking accounts, invoices, accounts receivable and/or other bankable assets. From an interest rate perspective, the rate charged for a secured loan is lower than the rate that would be charged for an unsecured loan of the same credit score. Asset-based financing can either serve as growth capital or working capital for a business.
The main logic behind asset-based lending is that even if a business does not meet fully the free cash flow, EBITDA and the overall credit requirements, can still use its valuable and assets to obtain financing.
Thus, in case of a default of the borrower on its loan, the lender is secured to a certain extent by the assets which are used as collateral. The business of asset-based lending can assume important risks though. The selling or liquidation of the assets sometimes can be a lengthy process that can easily become a financial burden for the lender.
Asset-based lenders vary in terms of their lending criteria and requirements as they range from traditional banks to other types of financial companies. Some are specialized in lending against a company’s tangible assets, whereas others use the company’s accounts receivable and inventory.
Asset-based lenders all have certain terms and preferences in common. The type and quality of the collateral assets determine the characteristics of the loan which can reflect over the operational and financial covenants for the borrower. In that context, there are important requirements and criteria for the asset-based lenders. A few of these refer to the liquidity and depreciation characteristics of the collateral assets. Assets that can be turned into cash or depreciate at a slower rate are more valuable than others. Of equal significance, is the monitoring of the economy and market conditions, as their fluctuations can affect the value of the assets.
Asset-based lending has a detailed and analytical due diligence process. Apart from an inspection of the accounting and financial material of the borrower company, onsite visits and management interviews can take place to a great extent. Separately from any Balancesheet depicted book values of the company’s assets, there are also independent appraisals required by third-parties (evaluators) on the market values of these assets. It is this process in its entirety that determines the values of the assets to be pledged. Depending on the types of the collateral assets and the overall risk assessment, the lender will determine the final level of the loan-to-value of the asset-based loan.