Insights

Ballinger & Co. assists Ori Biotech and its Series B Investors with $100M uncollateralised FX hedging facility, delivering certainty to all stakeholders, and saving the company $2.8M

Ballinger & Co. is a London-based FX specialist focussed on fund managers, including private equity and venture capital firms and their portfolio companies.

By fostering long-term relationships with these clients, the firm has developed a deep understanding of both currency exposure and operational constraints when deploying capital, hedging investments, and buying or selling assets cross-currency.

One of the key operational constraints for these clients are Initial Margin (IM) and Variation Margin (VM) requirements of forward contracts, which often mean that the benefits of certainty provided by hedging are offset by the inefficient use of capital for IM or the requirement to have cash on hand or make capital calls to investors for VM.

The depth of experience and relationships that Ballinger’s commercial and risk professionals have in this space provide unique insight and perspective, which contribute to the firm’s approach to evaluating risk and providing specialist solutions, particularly with credit, where Ballinger has a unique and progressive approach.

Ballinger deploys its own capital and leverages its banking and liquidity network to execute large notional, flexible forward contracts while sometimes completely eliminating the need for clients to post collateral.

“Ballinger have been assisting Ori Biotech for some time now with smaller FX trades for our operational needs. During our Series B raise, the team at Ballinger has been on hand to advise how best to manage the currency exposure and deliver certainty on exchange rates for us and our investors. Responding to our needs and moving at pace as the deal progressed, Ballinger provided a zero collateral, flexible solution while also providing competitive exchange rates. Each tranche was settled to us immediately, despite our close taking place over Christmas.”

Andrew Gawman, Global Finance Director, Ori Biotech

Case Study

Ori Biotech is a biotech scale-up researching and developing CGT Manufacturing technology that will revolutionise access to cell therapies for a range of diseases. As a UK company raising venture capital from the global marketplace, Ballinger has been working with Ori managing currency exposure since its inception.

Ori’s $100M Series B round involved multiple investors deploying Dollar capital. Ori reports in Sterling and most expenses are GBP denominated. Both investors and the company required exchange rate certainty at deal stage through to close 15 days later. Paying deposits or being exposed to variation margin calls in this window was unattractive to Ori.

The long-standing relationships between Ballinger, the client, and some early investors enabled Ballinger’s risk committee to approve a zero IM, zero VM flexible forward facility for the short-term hedge, meaning that no margin was required for the trade to be placed at Ballinger, and no variation margin would be called during the lifetime of the trade.

The flexibility inherent in Ballinger’s product would allow Ori to draw from the contract as each investor remitted funds, and any unforeseen delays to closing the round would be manageable by rolling the contract. Ballinger’s exposure to IM and VM was funded from the firm’s own capital and facilities.

The trade performed well for Ori. At close, each investor remitted US Dollar to Ori’s named multi-currency IBAN issued by Ballinger, and the purchased Sterling was immediately remitted to Ori’s corporate account as each payment was received. When compared to remaining un-hedged, the Ballinger solution saved Ori Biotech $2.8M.

“Ori Biotech is one of the most exciting and important innovators in the European biotech scene. We work with a number of biotech focussed VCs and keep a close eye on this space. This relationship highlights many of Ballinger’s capabilities: our highly competitive and deep liquidity, our willingness to deploy capital on behalf of our clients, and our ability to construct a flexible solution quickly. We’re glad to have been able to deliver a great outcome for all stakeholders, and we congratulate the team at Ori in their successful raise.”

Tom Dudderidge, CEO, Ballinger & Co.