The lending firm Equities First Holdings (EFH) is making headlines all over the world for its unique financing opportunities. Clients who choose to work with this firm have the opportunity to receive working capital in exchange for stocks, which provides unprecedented opportunities for freedom and growth. But what exactly is Equities First Holdings, and is there any merit to the controversies that are swirling around this veteran stock loan firm?
What Is Equities First Holdings?
EFH is a securities-based lending (SBL) service, which means that it accepts stocks as collateral from clients in exchange for liquid capital. This type of lending has become increasingly popular since the 2008 financial crisis, and clients can use capital from SBL to invest in companies, buy real estate, or perform any number of other transaction types. However, clients are restricted from using these funds to purchase other types of securities. Securities-based loans are also called non-purpose loans.
Since 2011, services like those offered by EFH have surged in popularity due to sustained low interest rates and a steady rise in equities. Loans like those offered by EFH are generally easier to acquire than traditional loans, and EFH makes the loan application process particularly easy. The loans offered by firms like EFH are also attractive due to their low interest rates; in most cases, the interest rates for securities-based loans are only 2-5 points higher than the LIBOR standard even though they are surprisingly easy to acquire.
While the loans offered by EFH are useful to consumers since they can usually be acquired within 24-48 hours, this advantage is offset by the inherent volatility of the stock market. Therefore, SBL funds like those offered by EFH are most useful in situations in which large amounts of cash are required over a short period of time.
Equities First Holdings is the biggest winner in its SBL business model. Since most clients who seek out SBL capital are relatively wealthy, there’s not much risk involved in SBL lending. In addition, the income stream generated by securities-based loans is steady and dependable in a lending market that is often fraught with uncertainty.
As one of the most prominent lenders in the SBL market, Equities First Holdings has gradually expanded its services and client reach. This firm’s growth is expected to continue throughout 2019 and beyond.
History of Equities First Holdings
EFh was founded in 2002 by Al Christy Jr., who remains in his post as the CEO of the company he created from the ground up. This firm is based in Indianapolis, but soon after its founding, EFH opened a satellite office in New York City. Since then, EFH has opened offices in Hong Kong, Singapore, London, Melbourne, Thailand, and Switzerland.
The rapid growth that Equities First Holdings has enjoyed is unusual in the securities-based loan industry. EFH has cited this growth as evidence of the inherent quality of its services, and unlike similar firms, EFH has never garnered the ire of the SEC or similar finance oversight institutions. Since its founding, EFH has performed over 650 transactions worth more than $1.4 billion, and this company continues to expand into new locations in the world’s financial epicenters.
What Services Does This Lender Offer?
The main service that EFH offers is providing loans with stocks as collateral. The securities-based loans do not require the stringent application process that’s necessary to obtain traditional loans, but the value of the collateral given for these loans is dependent on the fluctuations of the stock market.
When a client provides EFH with stocks as collateral, most firms like EFH sell these stocks to create liquidity. Then, when the client pays back the loan, these stocks are repurchased from the market.
The entire premise of these types of services is based on the ability of firms like EFH to sell and repurchase stocks with other people’s money. EFH does not have any audited cash reserves that it can use if there is an issue with this transactional model. In addition, EFH does not produce any financial statements proving its ability to repay securities.
EFH’s recently announced that it has received the blessing of the Dubai Financial Market (DFM) to conduct authorized repurchase transactions. While other financial oversight institutions, such as the SEC, have not yet recognized EFH’s right to perform these transactions, it is likely that, like similar firms, EFH performs security selling and repurchasing as its main business model.
Equities First Holdings offers its services to both businesses and consumers. The only requirement for acquiring one of the loans offered by EFH is the possession of stocks. As long as these stocks have collateral value commensurate to the liquidity loan that is desired, EFH is happy to provide its services.
EFH generally offers loans with loan-to-value (LTV) ratios of approximately 75 percent. Therefore, if you have stocks worth $25,000, you can usually secure a $100,000 loan from Equities First Holdings. In addition, the average interest rates for the loans offered by EFH range between 3 and 4 percent.
How Do You Get a Loan from Equities First Holdings?
The process of receiving a loan from EFH requires a number of steps. However, this firm prides itself on its responsiveness, which means that rulings on loans are usually provided within 24 hours.
1. Contract Initiation
First, you’ll need to reach out to a client manager at EFH. Before you do so, however, it’s important to arrange all of the necessary information on your collateral. While you can contact EFH before you put together all of your securities information, the process will be faster and smoother if you take care of this step ahead of time.
2. Loan Valuation
After considering your collateral information in relation to the requested amount of your loan, EFH will consider its ability to provide you a loan on the specified terms. If your EFH client manager is incapable of meeting your original loan ask, he or she will inform you of the terms that the firm is able to offer. This counter-offer will include all relevant information on fixed interest rates and the LTV ratio that will be offered.
3. Agreement on Terms
Once you are in receipt of the terms offered by EFH, you will be given the opportunity to either accept or reject the terms of the agreement. If the terms are satisfactory, you will then be able to sign over your stocks to EFH.
4. Simultaneous Transfer
When both parties have agreed on the terms of the loan, a simultaneous transfer will be scheduled. During this simultaneous transfer, control of your stocks and the requested loan amount will be transferred to the relevant party at the same moment. This transfer is performed simultaneously to ensure that both parties receive the agreed-upon value without any hiccups.
5. Return of Collateral
Once you have fully paid back the amount of your loan along with any accrued interests, your collateral securities will be returned to you.
The EFH Team
Over the years, the EFH team has grown to a significant degree, and this company now employs securities-based loan experts all over the world. Here’s a basic dossier on some of the top players within this popular SBL firm:
Al Christy Jr.
Al is the president and CEO of EFH, and he oversees all of the operational activities of EFH and its wholly owned subsidiaries in London, Australia, Hong Kong, Singapore, and Thailand. He has more than 20 years of experience in running financial institutions, and he is an expert in emerging market development, global resource development, and long-term strategic planning.
Before he founded Equities First Holdings, was a mortgage lender with Diversified Financial Group, and he also worked in loan origination at Fidelity Investment. In tandem with his professional life, Al is also a lifelong baseball player, and he has played in a variety of minor-league baseball organizations.
Jeff is the senior managing director at EFH, and he is in charge of developing marketing, sales, and client acquisition. In addition, Jeff oversees underwriting at EFH, and he is this firm’s Chief Compliance Officer.
Having more than 30 years of experience in managing financial institutions, Jeff is uniquely positioned to be in charge of EFH’s lending and accounting practices. Before working with EFH, Jeff worked with global financial institutions like JPMorgan Chase, Prudential Lehman Brothers, and Goldman Sachs. Jeff holds a BS and an MBA from Miami University in Oxford, Ohio.
As EFH’s Director of Operations, Julie is in charge of procedural execution at this firm. She makes sure that all of this company’s compliance, legal, and funding mechanisms work without any issues, and she also oversees accounting and human resources at Equities First Holdings.
Julie has more than 30 years of experience in business management, and she leverages this expertise to make sure that EFH’s strategic operations, regulatory compliance, and resource management functions work smoothly. Before working with EFH, Julie worked in the accounting, service, and construction industries in management positions.
Reuben is the Head Trader at EFH, which means that he is in charge of execution oversight regarding this firm’s global portfolio. He also handles EFH’s strategic risk management functions, and he performs ongoing market analyses to ensure that his company’s resources are allocated efficiently.
Reuben also supervises all of the other analysts and traders who work at EFH. He has over 20 years of experience in trading, and he works at EFH’s headquarters in Indianapolis.
As EFH’s Chief Risk Officer, Simon administrates this firm’s global risk management strategy. It’s Simon’s job to make sure that EFH doesn’t make any risky lending decisions, and he’s well-equipped for this position due to his experience as the founder and director of Moore Quantitative Solutions. Simon also has a BSc in mathematics and computing from the University of Bath in the UK.
Brandon is one of the up-and-coming stars at EFH to watch as this firm continues to expand. With nearly 10 years in marketing and communication experience, Brandon serves as EFH’s Director of Marketing and Communication. It’s his job to make sure that every client experience is up to par, and he’s also in charge of putting a good face forward in the arena of public relations. Before working at EFH, Brandon worked at Eli Lilly, Firestone, and Calumet Specialty Products.
EFH’s Top Achievements
Since its inception, EFH has stood apart from other securities-based lenders in a number of different ways. The most notable achievement of this company is simply staying in business; while many competitors have come and gone, EFH remains one of the few STL firms in the world that still produces satisfactory customer experiences. As it has adeptly evaded potential lawsuits and concerns from securities exchange oversight organizations, EFH has gradually tucked the following six accomplishments under its belt:
1. International Expansion
From its humble beginnings in Indianapolis, EFH has rapidly grown into one of the biggest STL firms in the world. This company has a number of independently-owned subsidiaries, but it retains five wholly-owned subsidiaries in the UK, Australia, Thailand, Hong Kong, and Singapore.
With this extensive location portfolio, EFH is uniquely positioned to exploit a variety of capital markets that are out of reach from its competitors. While all of the shots are still called at this firm’s headquarters in Indianapolis, each subsidiary is staffed with the best of the best of the local population, and EFH plans to expand even more in the coming years.
2. Harnessing Organic Market Cycles
EFH does its homework. While many competitors have failed by remaining too rigid in the face of natural market fluctuations, EFH prefers to carefully study markets and make plans based on organic trends. This strategy has allowed EFH to grow exponentially, and maintaining these values will allow this firm to adapt to any future circumstances.
3. Expanding Partnerships
Rather than go it alone, EFH has elected to enter into certain strategic partnerships to assist in continued growth. For instance, when this company partnered with Meridian Equity Partners in 2013, EFH experienced a nearly instantaneous 50 percent increase in its workforce.
This rapid expansion in human resources made it possible for EFH to open new offices in Jakarta, Singapore, and Hong Kong. In addition, EFH has partnered with select groups in India to ensure that growth and development of this country will continue unabated.
4. A History of Repayment
One of the reasons why the STL industry has gotten so much flack is that due to market fluctuations, it can sometimes be hard to repay loans that clients have taken out. However, EFH notably repaid a transaction with Andrew Newland, the CEO of ANGLE, with collateral shares valued at $1.35 million. EFH also had no trouble paying back an equally large loan that was taken out by the online payment platform PaySafe.
4. Streamlining a Simple Application Process
EFH has made it surprisingly easy to take out loans. With a simple online application process, anyone can request a loan from EFH from anywhere in the world, and this company prides itself on rapidly responding to every customer inquiry. In addition, EFH charges surprisingly low interest rates; while the rates charged by this company vary greatly, they usually don’t exceed 4 percent, which removes a lot of the risk of taking out a loan with this firm.
5. Maintaining a Rapid Response Time
EFH claims that it responds to all loan applications within 24 hours, and most inquiries are addressed even faster. Quick response time to loan requests isn’t the only way that EFH puts customers first; this company also rapidly responds to any customer questions, complaints, or concerns.
EFH runs a tight ship, and this company’s efficiency has contributed to the competitive edge that has kept it afloat for such a relatively long time. This company also pursues a policy of flexibility, which improves its capacity for customer service and facilitates continued growth.
Some concerned consumers have linked the EFH business model to that of Derivium, which is currently being hit with dozens of lawsuits for being a Ponzi scheme. There are also claims that EFH is facing similar lawsuits, and there are concerns that this firm does not have any audited cash reserves to back up its loans.
EFH defends itself from these attacks by citing its more than 15 years of experience in securities-based lending. The rationale given is that if EFH was not operating a viable business, it would have gone bankrupt or been shut down by the SEC by this point.
While EFH appears to be highly transparent in its description of its services and the terms of its loans, it’s undeniable that firms offering similar stock-based loans have gotten into severe legal turmoil in the past. Most clients appear to be fully satisfied with the services offered by EFH, but it’s important to keep in mind that the type of financing offered by this company is inherently more volatile than other forms of lending.
It’s worth noting that the reputable consumer advocacy website Ripoff Report has stated that EFH has a great track record of responding to customer complaints and resolving issues. While the STL industry may be inherently risky, it appears that EFH does a good job of removing the risk associated with this type of lending.