NPL_Factory

We are interested in working with counter party banks in helping them clean up their Non Performing Loan (NPL) portfolios in an ‘off balance sheet’, ‘off market’ transaction. At this stage we request you provide us with a high level summary of your NPLs.This information should include the book value of the NPLs, the number of NPLs as well as their minimal and maximum book values. Upon agreeing to engage, we will require full details as the NPLs are prepared to enter our NPL_Factory. 

NPL_Factory History

We spent Q1 and Q2 of 2015 conducting proactive research, devising the NPL_Factory model and socialising same with initial bank counter parties, drawn from several countries throughout the world. 

From Q3 2015 onwards, we have successfully processed several tranches of NPLs, using an “off market” and “off balance sheet” protocol. The turnaround timetable for the target companies has been circa 9 months. 

This processing activity has generated several hundred million dollars worth of illiquid assets, stifling our ability to scale up the NPL_Factory.

In late Q3 2016, we started devising a more efficient and effective exit mechanism, which has now been finalised. This enables us to scale up our NPL_Factory without limitation.

The end point of the exit process is an ETF (Exchange Traded Fund) which purchases a debt instrument containing the Performing Loans (PLs), or they are placed in a debt security and placed on the London Stock Exchange (LSE).

NPL_Factory

Our NPL_Factory is an ‘off market’ and ‘off balance sheet’ service which assists client banks to resolve their NPL problems confidentially. As part of our NPL_Factory process, we agree with client banks a simple exit strategy. 

NPL problems can be caused by accidental under-reporting of NPLs, confusion caused by differing definitions, lack of clarity provided by regulators etc

Worked Example

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumptions

$250m NPLs Book Value

50% haircut

$125m Post haircut value

Independent assessments, leading to a truly independent valuation of the loan portfolio

The diagram above shows the flow of funds

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Once the final report is issued, FundCo purchases the - now performing - loans at a % discount to, or premium to the Post haircut value. FundCo raises $250m to purchase the loan portfolio and provides adequate funding to restructure, refinance etc the underlying NPL items.

NPL_Factory Process

NPL_Factory Process

NPL_Factory Process

‘Off Market’ and ‘On Market’ activities

‘Off Market’ and ‘On Market’ activities

Off Market Elements and On Market Elements

Off Market Elements and On Market Elements