Alternative
Finance
Traditional Financing
Financing strategies at the institutional level can be broadly categorized into two main approaches: equity financing or debt financing. Under aligned conditions, most companies prefer to adopt a combination of both options. This can be attributed to the fact that both equity financing and debt financing have their advantages, constraints as well as risks.
Hitherto, equity financing, which involves the dilution of ownership stake, is the most viable option for startups or companies whose valuations are not (yet) backed by robust trajectories. It is however noteworthy that this financing option could prove to be more time consuming than expected, especially if the counterparts are upper-market PE/VC or SWFs (who often entail stringent compliance procedure for clearance).
Debt financing follows a more straight forward and simplified process. But, in the context of most Asian economies, debt financing options are skewed towards traditional loan structure from banks (or private lenders), which will require collateral (and personal guarantee). Not forgetting, the imposed LTV suggests the need for primary funds. More sophisticated debt financing options, which involve the use of fixed income instruments, are only feasible and effective for upper-market companies backed by assets and robust earning trajectories. This implies that a relatively significant segment of small to mid-sized companies will need to navigate the market with limited financing options at higher cost, regardless of the excess liquidity condition at the macro level.
Alternative Financing
Alternative financing, which involves the strategic arrangement of a unique suite of players in the debt and alternative investment space, has since become increasingly popular in the U.S. - especially among startups, mid-market companies, and to finance projects in industries deemed more risky by traditional financing practices.
In contrast to traditional banking practices or/and equity financing, alternative financing solutions leverage on the participation of highly professional finance specialists in navigating the complex and complicated structured loan and finance solutions, This involves underwriters offering an integrated solution at every stage of the process, including origination, structuring and syndication.
The SDGA professional team connects qualified borrowers/clients into a well-designed and strategic setup, which involves the participation of wholesale lenders and family offices in the U.S., as well as re-insurers and debt buyout firms on Wall Street, with the ultimate aim to hedge the risks of stakeholders yet generating additional returns on liquid funds and asset collaterals. We promote an alternative financing solution that enables our clients across Asia Pacific to exploit the non-amortizing features of more sophisticated debt financing solutions (widely practiced in the U.S.), and at competitive cost. It is however noteworthy that concerted effort will be made to select qualified clients/borrowers for such financing scheme, in order to mitigate the risks for other stakeholders.
