Selling your outstanding account
receivables to an spv
Selling your open trade receivables to an SPV (special purpose vehicle) designed to attract alternative investors. Such investors may be investment banks, institutional investors or other parties.
Your receivables are sold to the SPV. This increases your working capital in the short term. The receivables disappear from your balance sheet, improving your ratios and keeping you within your covenants.
Euler Hermes has an AA rating, which means the SPV will also be rated AA. This has important benefits for investors in terms of capital allocation
By operating a senior and a junior tranche, you can offer 100% protection to investors for the receivables sold.
Setting up an SPV involves working with an intermediary, one or more investors and (if requested) a ratings agency. Euler Hermes takes care of covering the SPV’s underlying assets (i.e. the receivables), providing a bespoke policy for the investor and screening the receivables to ensure that they are eligible for inclusion.
For investors, it is important that a certain amount of capital is made available that rotates with sufficient frequency for a healthy return to be achieved. This route can be profitable both for your business and for investors from a monthly outstanding balance of €25m.
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