A growing number of UK founders are accessing liquidity by borrowing against shares in their private companies, without selling equity or pledging personal assets. As specialist lenders enter the market, these structures are becoming a viable route to access capital ahead of an IPO or exit. 

The most interesting lending market in the UK right now is the one almost nobody talks about. It's the market for cash raised by founders against shares in their own private companies, before a listing or sale event. Five years ago this was a corner product. Today it's one of the busiest queues at our door.

We've just placed a £9.5m facility for a UK entrepreneur secured against shares in a mature private company valued at around £20m, with an IPO expected within three years. The structure is non-recourse, around 50 per cent LTV, and runs over five years with built-in flexibility for an earlier sale. No additional collateral. No personal guarantees against the family home. The lender underwrote the business itself.

That last sentence is doing more work than it looks. The reason this kind of facility is hard to arrange is not that the asset is bad. A private company doing real revenue, with a credible exit on the horizon, is in many ways stronger collateral than a basket of small-cap listed names. It's hard because most lenders active in the securities-backed space have built their books around two things: listed equities with daily liquidity, and a handful of high-profile late-stage names where secondary trades happen regularly enough that a desk can mark the position. Walk in with shares in a private business outside that universe, and most desks freeze. They don't have a price feed. They don't have a documented exit route. They want either a personal guarantee, additional collateral, or both.

The result, for years, has been that founders with significant private equity in their own companies end up doing one of three things. They sell some of the positions early at a discount. They take a recourse loan that defeats the purpose by re-pledging assets they wanted to protect. Or they delay the project they were trying to fund.

What's changed is the lender base. A small number of specialist banks and a much larger group of private credit funds have decided that underwriting the business itself is a viable way to deploy capital. They price for the illiquidity rather than refusing to lend on it. The all-in cost is higher than a standard Lombard line against listed shares, but it is real money, available now, against an asset the borrower would otherwise have to sit on. For a founder with three years until a listing and a venture they want to fund today, that maths is straightforward.

Two structural points sit behind the trend. First, IPO timelines have stretched. Companies that would have listed in year five are listing in year eight or year ten. The amount of value sitting in private equity has grown accordingly. Second, the wealth of UK entrepreneurs is increasingly concentrated rather than spread. The standard wealth management answer of "diversify and use the cash you've taken off the table" doesn't apply if you haven't taken any cash off the table.

There are caveats. Lender appetite for private share collateral varies sharply by sector, by funding round quality, by cap-table dynamics, and by how credible the planned exit looks. A SaaS business with an annualised revenue run rate, recent institutional investors, and a clear exit path will get materially better terms than something earlier-stage or in a sector where comparables are thin. Loan-to-value tends to land between 30 and 55 per cent. Pricing is bespoke. Documentation is heavier than a Lombard facility because the lender is doing the diligence that the market hasn't done.

The risks need to be stated clearly. Share values can fall. Liquidity events can be delayed or cancelled. A facility structured around a three-year IPO becomes a different conversation if that timeline becomes five years. Borrowers should plan for that scenario before they sign.

The point I want founders to take away from cases like this one is simpler. If you have significant value tied up in private shares and you're being told the only way to release capital is to sell the position or pledge your house, you are speaking to the wrong lenders. The market has moved. There are around half a dozen names actively pricing this kind of risk in the UK right now. Most clients have never heard of any of them.

Read the full case study here: https://www.ennessglobal.com/insights/case-studies/gbp95m-loan-secured-against-private-company-shares