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How do we coordinate the asset securitization process at FlexFunds?

Asset securitization is nothing more than a process of transformation of any financial asset into a negotiable security. This financial technique gives rise to exchange-traded products (ETPs) that act as investment vehicles. Their objective is to provide the underlying assets with greater liquidity, flexibility, and reach.

How do we coordinate the asset securitization process at FlexFunds? Below, we explain it step by step.

Why use asset securitization?

You may find it interesting to convert your asset portfolio into a listed security in one of these cases, among others:

  • You want to repack your investment strategy in an alternative vehicle to traditional investment funds and be more efficient in terms of cost and structuring time.
  • Your company has alternative assets with the capacity to generate future cash flows, but they are not sufficiently liquid.
  • You need cash inflows with immediate availability.
  • You are interested in diversifying your sources of financing.
  • You want to increase your ability to raise capital.
  • You manage a real estate investment fund, a private equity fund, or a hedge fund and need an efficient structure for your investment strategy.
  • You want to broaden the scope of your strategies and reach out to international investors more straightforwardly.
  • You are interested in isolating the risk of a given investment strategy from your current activities.
  • You do not want to resort to bank credit.

These are just a few examples; you can contact one of our representatives, and we will meet your specific needs.

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How is the securitization process at FlexFunds?

STEP 1. – Customized assessment and design of the ETP.

Because securitization can occur on many assets of different nature (both publicly listed in secondary markets and private), it is necessary to analyze each case and offer a custom-designed solution.

After contacting FlexFunds, a detailed study and data collection are carried out to establish the best possible strategy.

FlexFunds works with recognized international service providers to coordinate the process of creating and issuing the ETP best suited to your needs.

STEP 2. – Approval of the risk committee and signing of the Engagement Letter.

Once the product structure has been defined, the risk committee proceeds to study and evaluate the case.

Subsequently, the Engagement Letter is signed: the contract specifying the terms and conditions and the scope of the functions to be performed by FlexFunds.

STEP 3. – ETP structuring and document review.

Our legal and operations team works hand in hand with the client to draft the documentation to structure the ETP. We proceed to the onboarding phase of the asset or portfolio manager.

It is now when the essential documents of the investment vehicle are drafted and reviewed (by the client and the service providers), for example:

  • Series Memorandum: document specifying the investment terms, risks, and the general summary of the transaction.
  • The Constituting Instrument formalizes the incorporation of the series.
  • The Portfolio Management Agreement is the contract in which the responsibilities and objectives of the Portfolio Manager are established. This document specifies the management criteria and restrictions.

STEP 4. – Issuance and listing of the ETP.

In this part of the process, the asset securitization materializes through the issuance of the investment vehicle under an Irish SPV (Special Purpose Vehicle). The structuring process is now complete. At this point, your investment strategy is already repackaged in an ETP (Exchange Traded Product): a listed and tradable security.

Only during this step is an ISIN/CUSIP code generated, facilitating its distribution.

As mentioned above, the securities are issued by the Irish Special Purpose Vehicle (SPV) set up for this purpose and are backed by the investment strategy itself, which acts as collateral.

FlexFunds offers you a comprehensive service, including an underlying custodial account for the cash and securities of the investment strategy. In addition, FlexFunds acts as the calculation agent of the Net Asset Value (NAV), published on Bloomberg, and disseminated directly to the brokerage accounts of the investor that have subscribed to the ETP.

STEP 5. – The ETP is ready for trading through Euroclear.

The asset securitization process ends with the issuance and listing of the ETP. Now it is ready for distribution.

Investors can access your strategy easily, with a simple purchase transaction of the securities in Euroclear through their brokerage accounts from many custodians and Private Banking platforms.

What are the advantages of our ETPs?

An ETP aims to cover the above needs by transforming your asset portfolio into a bankable investment vehicle (turning it into a “bankable asset”). All this is within a concise time frame ranging between 6 and 8 weeks.

The strategy’s trading becomes more straightforward. Distribution is done through a placement agent. At FlexFunds, we create Euroclearable ETPs, so we provide our clients with the ability to access international Private Banking platforms with international reach.

Our existing commercial agreements with world-class providers allow us to simplify the asset securitization process and offer a service with high-quality standards at a very competitive cost.

You can contact FlexFunds to schedule an initial consultation with one of our financial experts. We work with large-scale arrangements, which allows us to be able to service small volumes of assets. Whether you manage US$ 1 million or US$ 200 million, FlexFunds’ solutions can increase the distribution capacity of your investment strategy.

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Welcome to FlexFunds

We provide our services under the Global Note Programs through several entities that perform different activities. Among these entities are FlexFunds ETP LLC which acts as Calculation Agent, and FlexFunds Ltd, which acts as the Program Coordinator. Before making a decision to invest in the Global Note Programs, you should consider the following:

  1. Independent entities. FlexFunds ETP and FlexFunds Ltd. are not managers of the special purpose vehicles, collectively, responsible for the issuance of Notes under the Global Note Programs.
  2. Coordinated Activities. FlexFunds ETP and FlexFunds Ltd act as coordinators of the different entities participating in the Global Note Programs. However, each of the entities is responsible for its own duties and activities in the process.
  3. Not Broker-Dealer or Investment Adviser. Neither FlexFunds ETP nor FlexFunds Ltd. is a U.S. registered broker-dealer or an investment adviser registered with the U.S. Securities and Exchange Commission. Our entities do not raise capital for clients or the Issuers. We do not solicit any specific products, nor offer investment advice or make investment recommendations, nor do we offer tax, legal, financial advice or otherwise.

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