Concentrated single-stock liquidity.

Concentrated single-stock liquidity is a Lombard loan against one large holding in a single listed company, structured to release capital for diversification or deployment without selling the position. The holder pledges the concentrated stake, draws cash against a fraction of its value, and puts that cash to work elsewhere — while keeping ownership of the original name, its dividends and votes subject to structuring, and its upside. It converts a locked, single-name risk into usable capital without crystallising a disposal.

The concentration problem

Concentration is how most large fortunes are made and the last risk their owners address: a holder whose wealth sits in one listed stock carries the full idiosyncratic risk of a single company, yet has good reasons not to sell. The holding may come from a sale of a business paid in shares, an inheritance, long-held conviction, or an option exercise.

Selling triggers a disposal and its tax, sheds an upside the holder may still believe in, and, for a large block, can attract a discount and a market signal. The holder wants what a diversified investor already has: capital that is not hostage to one share price. A Lombard loan supplies it by lending against the position rather than liquidating it. Selling, margin loans, and collars are weighed against it in liquidity options compared.

How a single name is assessed

The whole of the underwriting is in the one stock, so the assessment is exacting: a lender asks how readily the collateral can be valued and, if it ever came to it, sold without moving the price.

The assessment turns on the free float, the average daily volume, the volatility of the shares, and the size of the position relative to that daily volume: a stake that would take many days to unwind is treated more cautiously than one that could be cleared quickly. These drivers set the loan-to-value and the haircut, the buffer between the market value of the shares and the cash advanced.

A single concentrated name will always support a lower advance than a diversified, liquid portfolio, because none of its risk is spread. The calibration is transparent and specific; there is no rate card and no headline number. How concentration shapes the advance is set out in borrowing against a concentrated position.

Managing the risk of one name

Lending against a single stock means managing the possibility that the stock falls, and two things do the work: conservative sizing and the cure mechanism. The first is conservative sizing: setting the advance well below the collateral value builds headroom to absorb ordinary volatility.

The cure mechanism is the second: if the share price drops far enough to breach the agreed loan-to-value, a margin call asks the borrower to restore it, and a well-drafted facility lets that be met by adding collateral or paying down part of the loan rather than by a forced sale.

The borrower keeps the market risk of the name throughout — that is the nature of holding it — but the structure is built so that a bad month does not become a liquidation. For holders who want to cap the downside as well, a hedge or collar can be arranged alongside.

Using the proceeds to diversify

Diversification is the most common use of a single-stock facility. The holder draws against the concentrated stake and deploys the proceeds into a broad portfolio, so that risk is spread while the original position — and the upside the holder wanted to keep — remains in place.

The disposal a sale would have crystallised is deferred; the concentrated name stays pledged and intact; the new, diversified capital does the diversifying. Others use the same facility to fund a purchase, a business, or a co-investment. In every case the principle is identical: value is extracted from the position without extracting the holder from it.

Structuring at a glance

A Lombard loan against a concentrated position is secured on one listed name, with loan-to-value set conservatively and a larger haircut than a diversified portfolio, so capital is released to diversify or deploy without selling the position.