Private Placement Facilities (PPPs)
have been in use by private and public companies around the world for over a
decade. Previous to this, the specific concept of executing capital increases
in smaller amounts with greater frequency, upon which the PPPs were developed,
has been utilised by private and public companies for over 20 years. This
concept was originally known as 'dribble out' financing and was developed by
Tier 1 investment banks. The Tier 1 banks and their clients felt the
structure provided greater flexibility and the ability to take advantage of secure
Today, PPPs are a common form of
financing for public companies of all sizes and are also popular for private
companies prior to listing. PPP facilities are typically utilised by public and
private companies for the following objectives:
PPP facilities offered to private
companies represent a flexible and cost-effective alternative to traditional funding.
It provides a company with steady build up of reserves/capital, Under the
facility, the company receives a binding obligation by the PPP facility
provider to issue a regular disbursement on a weekly or monthly basis over a
specified term which are interest free and non-repayable as they are deemed to
RULES OF THE ROAD
Customary standards and practices that
apply to normal, conventional business, investing and finance, apply to “trading/transaction-programs”.
Personal business and financial success have virtually nothing to do with who
you are and what you know or what you have, but almost everything to do with
what you are and whom you know.
It is a "privilege" to be invited to participate in a Private
Placement Transaction Program. It is in all cases not a Investors "right." to participate without
invitation. These programs deliver unparalleled yields in combination with
absolutely no program-related risk. The trading administrators and managers
have a virtually endless supply of financially qualified applicants. All things
considered, the trading administrators and their banks will favour the
applicant who provides the best paperwork in a timely manner.
applicant should never underestimate what the trading entities know about him.
Failure to provide full disclosure will disqualify the disingenuous.
these programs exist to finance humanitarian projects, not to generate more
money for the wealthy. Clients who have such projects usually receive preferred
treatment and the highest yields.
Clients must first
prove that they are qualified, not the other way around. Until the client is
accepted by Compliance, the Traders, and Trading Banks, no placement can occur.
The Due Diligence Convention and the Federal Banking
Commission Circular of December 1998, concerning the prevention of money
laundering, and Article 305 of the Swiss Criminal Code and the Money Laundering
Regulations 2007 (UK) has introduced
obligatory stringent compliance procedures, which lengthens the time required
to receive clearance. Clients will always need to confirm their Assets, Funds, and
Collaterals with Swift Confirmation MT760 after receipt of trading contract.
Face-to-face interviews with compliance
officers and program management are occasionally required, but generally not necessary, only conference call between client and
trading group, and clients may be required to enter a JV with the group to
participate in the program.
Any arrogant or
demanding personality will be guaranteed to be rejected and reported to the authorities
and Trading community.
Once a contract is
agreed during a meeting or conference call with the trader the signed copy must
be returned within 48 – 72 hours or the contract will be cancelled.
By individual Investors, only the
principal owner or beneficiary of funds/instrument is required as signatory and
must be named on the application form (CIS), no lawyers, mandatory’s, assignees
etc. Corporations must empower an Officer or Director as sole, exclusive
signatory by using a Corporate Resolution signed by the board members or in the
case of joint ventures between individuals the beneficiary must sign the
only do the funds have to be on deposit in a top bank; it must also be in an
acceptable Western (preferably) jurisdiction. If not, the funds must be moved
to an acceptable jurisdiction, or else responsibly endorsed by an acceptable
bank in an acceptable venue.
It is fraud to submit documents or
financial instruments that are forged, altered or counterfeit. Such papers are
promptly referred to the appropriate law enforcement agencies for
immediate criminal prosecution and the client and his facilitators will be
immediately “black Listed” .
The practices, procedures and rules are
determined by the US Federal Regulatory Authorities, Western European Central
Banks program management, licensed traders and trading banks. It is their
decision whom to accept and whom to reject. Contract terms, yield, schedules,
etc., are made to fit their needs and schedules and not the caprices or demands of the investors and/or intermediaries.
This marketplace is highly regulated and
strictly confidential, and absolute confidentiality by the investor is a key
element of virtually every contract. A
client who breaks confidentiality will precipitate instant cancellation of this
contract, often with severe legal consequence.
Submission of the application documents
to more than one management group at a time is termed "shopping." If
an investor "shops" he can expect that this fact shall be
quickly disseminated and known among the program management groups who maintain
close communication, and he will then be accepted by none – and rejected by all as"blacklisted".
Licensed traders and trading banks do not accept
applications direct from clients but rely on a select group of brokers and
compliance organisations to thoroughly vet each and every client before accepting
or inviting them to participate to avoid any fraudulent or criminal
We are often asked “Are you authorised to act for the trader”,
that is not how the system works. Licensed Traders, trading banks and
management groups do not authorise anyone to act on their behalf, but work with
and rely on a select group of brokers and compliance organisations they can
trust to introduce only genuine clients that are able to perform and meet their
To start the process there are standard paperwork required
for application. Further, the requirements for 2012 have been stepped up
by revision of the rules of due diligence required for clients, including a
personal phone contact with the principal applicant and very stringent
verification and explanation of Proof, Source and History of Funds.
Upon acceptance of the application for
processing we must be in direct contact with the applicant.
Document List is as follows: these forms must NOT be altered –
all forms and questions must be completed in detail
Information Form – Corporate and Individual
of Request for Information & Non-Solicitation
4. Authorisation to Verify
5. Origin and History of Funds
(NOTE: this MUST be fully DETAILED)
6. Resolution of Board of
7. Letter of Confirmation
8. Affidavit of Non-Submittal
9. Exclusivity Letter
Comfort Bank Letter by BG’s Cash Backed
11. Proof of Funds (NOTE: we need a current TEAR SHEET
or ACCOUNT STATEMENT issued by the bank as well as the POF letter NO OLDER THAN
12. Copy of Principal’s Passport
13. MT760 confirmation letter of emission
14. Verbiage of
MT760 (NOT TRANSFER!)
The starting point is at the least to provide a proper “tear
sheet”, or a current Account Statement showing ownership of the funds by the
applicant and a copy of the applicant’s passport. As discussed, all investment is on a “non-depletion”
basis – funds never leave the investor’s account.
As a direct consequence of the PPOP’s environment where this business has to
take place, a non- solicitation agreement has to be strictly followed by all
parties involved. This agreement strongly influences the way the participants
can interact with each other. Sometimes non-solicitation agreements foster scam
attempts, due to the fact that at an early stage it is often difficult for the
clients to recognise reliable sources to be in contact with.
There is another reason why so few experienced people talk about these
transactions: virtually every contract involving the use of these high-yield
instruments contains very explicit non-circumvention and non-disclosure clauses
forbidding the contracting parties from discussing or disclosing any
experienced contacts who are both knowledgeable and willing to talk openly
about this type of instrument and the profitability of the transactions in
which they figure. This is a highly private business, not advertised anywhere
nor covered in the press, and is closed to anyone but the best-connected, most
wealthy entities that can come forward with substantial cash funds.
WHO CAN AND HOW TO PARTICIPATE
Banks are not allowed to act as clients in such programs. However, they are
able to profit indirectly in different ways. Governments also can not act
directly as clients, but can through third party agreements, this fact permits
some private brokers and trading groups to assist clients to take part in this
process that otherwise would be a banking matter only. The assets coming from
private or corporate clients are necessary to start the process. These private,
large funds are the mandatory requirement for the buy/sell transactions of
banking debt instruments. Brokers are necessary to introduce and assist the
clients to the trading groups. Thus, each of the involved parties takes their
part in the sharing of the benefits, commissions for banks and brokers and
proceeds for trading groups and clients).
The purpose of this type of trading is to finance projects, not generate
tremendous profits for the client. These may be for-profit or non-profit and
can be funded as a result of this trading.
Since this type of trading generates such large amounts of money on the market,
measures must be taken to keep the inflation low. One way to do this is to
adjust the interest rates, but this usually has little or no effect. A better
way to minimize inflation is to let some of the profit be used for different
projects that need funding, such as rebuilding infrastructure in regions of the
world that have experienced catastrophes or war.
The complete process involving the issuing of debt-notes, the arbitrage
transactions, the programs, and the projects is a result of combined market
forces. Banks have a method of increasing their revenues and profits, clients
are able to finance different ventures, and borrowers are able to access loan
funds. There is a supply and demand for such instruments, and as long as the
supply and demand exists then also this kind of trading will exist.
Procedures for Governments
To understand the options open to any government that requires funding
for major humanitarian or infrastructure projects.
Funding from International / Capital Market /
The government could secure funding from the international markets by
issuing government bonds which will have an interest rate dependent on the
credit rating of the government.
The government engages with a contractor to complete the project and
issue them with a Sovereign Guarantee that will be issued in the name of the
The contractor, will then either seek funding from international banks
or if strong enough will fund the project themselves with the Sovereign
Guarantee as security.
In either case the international banks or the contractor will check to
ensure that the government has the capacity (funds) and reputation to repay the
In many cases option 1 is prohibitive either because the interest rate
is too high or they are economically depressed and are unable to secure
international funding as institutions may be concerned at the government’s
ability to repay the funds.
However, if the Sovereign Guarantee is issued to the contractor as
beneficiary of the guarantee, the contractor can use the sovereign guarantee as
security to access grant funding through the trading groups in their name as a
The Sovereign Guarantee would be classified as an “Operative” or “Financial
(a)It is issued by a Government who is a member of the
European Union and should have the backing or authority of the EU and IMF
(b)If issued by any
other Government it may need cash locked or blocked in an account in the
country’s central bank for about 20% of it’s value subject to a minimum of
$100m USD or the Sovereign Guarantee will be discounted significantly.
(c)The minimum face
value of a sovereign Guarantee must be $1BN USD
(d)It is issued by the government’s central bank by
MT760 conforming to the International Chamber of Commerce (ICC) verbiage for
operative financial instruments.
Provided the Sovereign Guarantee conforms to the ICC rules for Operative
Financial Instruments it will have a value that can be accepted by financial
institutions and trading groups as security.
In order to access this form of funding applications must adhere to
strict protocols as laid down by the funding institutions and to conform to the
“Non-Solicitation Act” as outlined above
GOVERNMENT APPLICATIONS WITHOUT A CONTRACTOR
Where a Government
has one project it is appropriate to engage with a contractor as in options 1
& 2 above, however if the Government has several large projects and they do
not wish to relinquish control of the project, contractor or the funding it may
be appropriate to form an alliance / joint venture and receive the funding
direct and disburse payments to the contractors on reaching specific
As mentioned above governments
can not enter these programs directly they need to utilise a similar
arrangement as that of using a contractor, that is, forming an alliance or
joint venture with a third party.
This type of funding
was initially set up under the Marshall Plan for Reconstruction after the
second world war and has been around in one form or another ever since, but for
the licensed traders and trading banks to distinguish
applications from Governments and that of individuals or corporations applications
for governments are entered under the title of the “Pure-Heart Facility”
The first thing to
understand is that the Pure-Heart facility is not a physical entity or
corporation but a grant type funding mechanism for Governments that is
available only through the top traders with the capacity to handle these size
For governments to be
invited they are initially required to forward a “Letter of Interest” and a
list of projects to be funded.
Thereafter we will
assist the government in setting up the joint venture, full compliance
procedures, application / invitation into the program and funding structure.
Where Governments are
unable to provide the minimum $1BN as a sovereign Guarantee we can provide
project funding for lower values from $100m plus, but the Government would need
to provide a Bank Guarantee in tranches of $100m with the cash supporting the
bank guarantee blocked in a international bank in the name of the government
and blocked for the duration of the funding. The blocked funds should have 2
signatures (1 a government minister and 1 a bank manager) to prevent any
movement or depletion of the account, otherwise the procedures and facility are
the same as for the Sovereign Guarantee.
17 Bethesda Rd
Swansea SA8 4QQ
Tel: +44 (0)2921 287111
Fax: +44 (0)1792 865792
Calls may be recorded for training and monitoring purposes