by John D. Darer CLU ChFC CSSC RSP
The inability to get traditional financing is leading some factoring companies to seek equity financing. Indeed on August 12, 2010 an Initial Public Offering (IPO) was announced for the common stock of Imperial Holdings, Inc. According to Reuters the $287.5M IPO was a needed alternative because Imperial said it was unable to access traditional sources of capital to finance the acquisition and sale of structured settlements after the global economic downturn. Imperial said in its filing that " at certain points, we were unable to get any debt financing".
Similar issues have plagued the nations two biggest cash now pushers JG Wentworth which had to file Chapter 11 in May 2009 and Peach Holdings which suffered a significant credit downgrade at one point.
The bigger company problems have also led to a greater appetite for in force structured settlement payment rights from individual investors. Many individual investors are willing to accept lower discount rates than the institutions thus squeezing those bigger players that must operate at larger spreads to support their overhead.