Structured Financing Strategies That Can Help Your Business Growth.
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.
What is Structured Financing?
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.
What makes Structured Finance important?
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.
The various Structured Finance products.
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. Let's understand that in a little more elaboration.
- A bond: It ensures capital protection. At any point in time, if the underlying asset does not perform as anticipated, the investor gets the capital invested returned cent percent.
- Underlying equities: It helps in improving the return on the investment. It could be an asset class such as equity, debt, currency, or interest rate.
- A derivative of the underlying asset: The derivatives component helps in determining the underlying instrument that allows investors to achieve a targeted return on investment.
Work of a structured finance analyst.
A structured finance analyst studies and analyses financial data of companies, stocks and assists 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.
Process of Structured Financing.
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.
Structured Financing in Gurgaon.
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, makes us a promising choice when it comes to Structured Financing. We assist corporates in raising funds through various debt 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.
Original source of this blog: https://www.resurgentindia.com/structured-financing-strategies-that-can-help-your-business-growth
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