£5.9 million yacht finance for international entrepreneur with €1 million AUM

THE SCENARIO

Financing assets is one of the many ways we can assist our clients at Enness. For example, I recently helped a client who required yacht finance for the purchase of a Sunseeker 115 Sport Yacht with finance of £2.9 million over a seven year period.

My client was an extremely successful international entrepreneur with a vast portfolio of global investments and trade. The boat was to be owned by a French company that was already established with a French VAT number. It would also be registered commercially under the French flag and would have a charter activity.

A deal had already been agreed for a purchase price of £5.9 million cash difference plus a trade-in of my client’s existing boat for £700,000. This came to a total price of £6.6 million excluding tax.

In line with this, my client wanted to secure a seven year balloon mortgage. This is when the mortgage does not fully amortize over the term of the loan, resulting in a large balance on its maturity. In this instance, the value of the boat in seven years’ time would be approximately £3 million, so my client wished to secure finance of £2.9 million over a seven year term.

However, some lenders are wary of balloon payments especially with luxury assets. This is largely due to the constantly evolving technology of assets such as yachts, causing their value to depreciate very quickly. (Not to mention the extremely high running and legal costs of simply owning one).

Consequently, the lender we approached was not willing to accept a balloon payment on the yacht as they would need to amortize the entire loan quarterly for a maximum of seven years. What they did offer, however, was to fund 100% of the entire £5.9 million purchase price after the trade-in, as long as they had a minimum of €1 million under management of the bank.

My client was more than happy with this result as he would have spent that on a deposit anyway, proving an extremely lucrative option for both my client and the bank.

This is an excellent example of the many opportunities available with a private banking relationship and their case-by-case approach to lending.

 

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