Promoters or Issuers use securitisation vehicles as an alternative to traditional bank funding, to transfer risk or deconsolidate risk off their balance sheet.
Securitisation is an operation by which investors buy securities in order to obtain the proceeds from the investments made by the securitisation vehicle into specific underlying assets.
Securitisation vehicles group assets that produce a predictable cash flow or grant the right to a future cash flow, transforming these assets into securities (shares, bonds or other securities).
These securities can be qualified as Asset Backed Securities (ABS), because the underlying assets serve as collateral for the investment.
As such the investor normally carries two risks: the uncertainty of a future cash flow and the risk of valuation of the underlying asset.
Securitisation is accessible to all types of investors (institutional or individual).
An extremely wide range of assets can be securitised: securities (shares, notes, subordinated or non-subordinated bonds), risks linked to debt (loans, mortgages, commercial and other), but also movable and immovable property (whether tangible or not) and, more generally, any cash flow linked to a business or an activity that has a certain value or a future income.
The Luxembourg law defines securitisation vehicles in the form of regulated or unregulated securitisation companies or securitisation funds.
A securitisation company must take the form of public limited company, a joint stock company, a private limited company or a cooperative with limited liability. It can create one or several compartments corresponding to a distinct part of its holdings.
A securitisation fund has no legal personality and must be managed by a management company, which itself has to be a commercial company. It is formed from one or several joint ownership organisations or one or several fiduciary estates.
Luxembourg law ensures the tax neutrality of securitisation vehicles.
Two solutions are therefore offered to investors:
- Creating their own securitisation company or fund
This solution offers the advantage of having a dedicated structure for specific securitisation transactions.
- Using the Creatrust Securitisation Platform
This platform accommodates our Creatrust Fund. It allows the issuance of securities linked to a specific underlying asset, as mentioned on page 1 for a particular individual or company investor. This Platform is used for simpler transaction and can be set up within a couple of days. The costs to securitisation such assets via this platform are +/- 0, 10 % of the assets under management.