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Examples of Securitisation of an Activity
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The Securitisation Law allows an activity and the risks/income
linked to this activity to be securitised.
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Let’s
take a company that holds rights related to a specific activity.
By way of example, the activity of renting out aircrafts to
third parties (or any other product: future commissions, consumer
credits, recurrent commercial activity, leasing of goods, vehicles,
ships, etc.)
The company can securitise this activity by transferring ownership
of future income resulting from aircraft rental to a securitisation
vehicle. The company will obtain a price that will depend on
the value of the transferred asset and on the discount of potential
income from the activity linked to management of this asset.
External investors finance purchasing of the aircraft and receive
securities in return for their investment. All income received
for leasing after deduction of fees will be paid to the securitisation
vehicle and, after deduction of operational fees, constitutes
the profits from this activity.
Each investor will therefore receive income in proportion to
the number of securities he holds.
Holders will be able to give, return, assign, transfer or sell
these securities to other holders. These will be paid profits
related to this activity and upon settlement, the possible profit
related to the sale of the aircraft.
This method allows the division of risks or investments between
investors who will have been able to acquire a share in the
activity.
This transaction allows a group of individual investors to acquire
an aircraft without having to carry all of the investment or
risks linked thereto alone.
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