In some cases, a borrower will require some capital beyond a single lender can provide due to risk-exposure level or capital insufficiency. In this case, funds can be merged from several lenders in a process known today as syndicated loans.
Debt syndication in a nutshell. With syndicated loans, a group of lenders will fund various portions of a loan to a sole borrower. A syndicated loan is designed to be arranged and administered effectively by a sole lender, usually accomplished through a third party or a consulting firm because several lending parties are involved. The credibility that DBS enjoys in the market has helped many customers of different sizes acquire excellent financing solutions.
Syndication solutions were initially only used by Fortune 500 companies that needed extensive funding for their projects. Today, SMEs and large corporations both seek syndicated loans. These are typically used to finance power plants, refineries, steel plants and even fund mergers, takeovers, and acquisitions. With many businesses plying in the Indian market today, the requirement for funds is only likely to grow, and debt syndication in India may offer a viable financing alternative to companies.
The Need for Debt Syndication in Singapore
Some businesses in the Singapore market today use additional financing solutions to get the financial leverage necessary to scale and grow. Firms in the Singaporean market have multiple options in financing solutions, but the syndicated loan has been gaining traction for many.
While the equity route is a good option for raising funds, it gives the investor a claim to the business and generally dilutes the ownership interest of the founders. Because of this, many company owners prefer retaining their claim to ownership of the business and stop themselves from acquiring equity funds.
Recently, debt syndication in Singapore has helped bridge the gap between equity and debt markets. The option to acquire syndicated loans means that owners have more methods to raise funds for their companies without needing investors that dilute their ownership.
The availability of these loans in the future is projected to rise depending on the trends of other countries like the USA, Korea, and Japan, which also have developed debt markets. Further, the long process of coordinating and meeting with different lenders is no longer required in the case of these loans. The increased availability of syndicated loans will be a huge advantage for corporates and entrepreneurs in the market today who are in the requirement of funds for their businesses by way of a structured product.
Choose a good syndicated finance processor
The DBS Syndicated Finance team has successfully executed complex financing deals for customers across diverse sectors in Asia. Our strong capital position complements our syndication capabilities, allowing us to lead the market with competitive tailor-made solutions.
Some of these transactions are usually confidential or time-sensitive, including the acquisition bid financing and public markets financings. You may also reference a bank’s successful deals by visiting a syndicated loan information page.
Syndicated solutions have become more enticing alternatives to many traditional financing options today. Like all credit facilities, it comes with both benefits and downsides, so your choice for a syndicated loan provider matters. Only commit with a provider with a proven track record and capability to deliver.