The whole company securitization is getting momentum as a viable financial tool in the corporate world. Traditionally, the securitization was in respect of a particular class of assets, but WCS breaks almost all the boundaries of traditional securitization and now the entire cash flow of the business is being securitized. The main impediment for the WCS is the novelty of the concept itself. But the final question is whether WCS is an appropriate financing method for any business.
Whole Company Securitization (WCS), also referred to as Whole Business Securitization or Operating Company Securitization, which is a more complex version of traditional securitization, after a lackluster start in 1990s, is now beginning to gain acceptance as a viable financial tool among corporates. This is reflected in the number of companies, particularly mid-sized ones, which have tapped the market with their WCS issues in recent times. According to the CFO magazine, April 15, 2004, about 14 deals were completed during the last one year. Given the fact that since 1990s when the first deal hit the market just 25 deals were completed, this augurs well for the market for WCS. However, it would be a while before the market for this tool takes off in a big way. There remains a number of issues, including legal provisions, which need to be resolved. Further, as the concept itself is new and yet to evolve, it could also act as a deterrent. |
