Private vs Public Securitisations: Why Some Deals Prefer to Keep it Quiet

Ever notice how some people share every detail of their lives on social media, while others don’t even have a Facebook account? Securitisations are surprisingly similar. Some deals strut their stuff in the public markets, while others prefer to keep things on the down-low. Today, we’re diving into the world of private versus public securitisations, and why funds typically choose to play their cards close to their chest.

Tale of Two Securitisations

Let me tell you about two deals we once knew. The first was a public securitisation – let’s call her Pamela Public. She was large, listed on exchanges, and loved attention. Everyone knew her details, from her credit ratings to her latest performance metrics. She had a thick prospectus that read like a Victorian novel and more regulatory filings than a tax accountant’s nightmare.

Then there was Peter Private. Same basic structure, but he preferred intimate gatherings with a select group of sophisticated investors. No flashy ratings, no public announcements, just quiet efficiency and bespoke arrangements. He was the financial equivalent of that exclusive restaurant with no sign on the door – if you knew, you knew.

The Cost of Fame

Here’s where things get interesting. Pamela Public’s lifestyle wasn’t cheap. She needed multiple lawyers (because one is never enough), rating agencies (those stars don’t award themselves), and enough documentation to destroy a small forest. Her prospectus was longer than the complete works of Shakespeare, and about as easy to read.

Peter Private, meanwhile, kept things simple. His documentation was lean, his investor group select, and his costs considerably lower. As one fund manager put it, “Why pay for a billboard when you can just send a text message?”

The Flexibility Factor

Public deals are like classical music – everything must follow the score exactly. Change one note, and you’ll need bondholder meetings, regulatory approvals, and probably a small miracle. We once saw a public deal try to modify its terms. By the time they finished, three lawyers had aged visibly, and someone was stress-eating their way through the office biscuit tin.

Private deals, however, are more like jazz. There’s room for improvisation. Want to add some assets? Adjust a term? As long as your investors are on board, you can make changes without triggering a bureaucratic avalanche.

The Time is Now (Or Maybe Next Month)

Speed to market is another fascinating difference. Public deals move at the pace of government bureaucracy – slow, deliberate, and with multiple tea breaks. Getting a public deal to market is like organising a royal wedding. There’s the preparation period (endless), the documentation phase (endless-er), and the execution period (surprisingly also endless).

Private deals can move faster than a caffeinated cheetah. One fund manager told me they closed a private deal in the time it took their public deal just to get its first rating committee date. “By the time a public deal finishes its roadshow,” she said, “a private deal could be done, dusted, and planning its first anniversary.”

The Information Game

Public deals have to share everything. It’s like having a reality TV crew following you around 24/7. Regular reporting, public filings, material event notices – if anything happens, the world needs to know.

Private deals take a more selective approach to information sharing. They still need to keep their investors informed, but it’s more like updating your close friends rather than broadcasting to the world. The information is often more detailed and meaningful but shared with a select audience who knows what to do with it.

The Investor Angle

This brings us to the investors themselves. Public deal investors are like social media followers – numerous but not necessarily deeply engaged. They rely on ratings, public information, and market sentiment.

Private deal investors are more like close friends. They’re fewer in number but more engaged. They do their own deep dive analysis, understand the complexities, and often have direct relationships with the deal sponsors. As one investor put it, “In public deals, you’re buying a product. In private deals, you’re entering a partnership.”

The Control Factor

Control in a public deal is like trying to steer a cruise ship – it takes time, effort, and a lot of advance planning. Want to make a change? Prepare for bondholder meetings, proxy votes, and enough paperwork to wallpaper your office.

Private deals offer more nimble control. Decisions can be made quickly, terms can be adjusted when needed, and the whole process is more responsive to changing conditions. It’s like driving a sports car instead of a cruise ship – you can actually take those corners when you need to.

Future Trends

The market is increasingly favouring private deals, especially for funds. They’re becoming more sophisticated, with better infrastructure and more standardised documentation (while still maintaining flexibility). It’s like the best of both worlds – the efficiency of standardisation with the flexibility of private arrangements.

Making the Choice

So, how do you choose? Well, it depends on what you’re trying to achieve. Public deals still make sense for very large transactions or when you need a broad investor base. They’re like hosting a major conference – sometimes you need that big platform.

But for most funds, private deals are like your favourite local restaurant – they might not have a Michelin star, but they serve exactly what you want, how you want it, and remember your preferences.

The Last Word

Whether you go public or private, remember this: the best deal is the one that meets your needs efficiently. Just like social media, being public isn’t always better – sometimes the best conversations happen in private.