French brokerage firm I-Kapital has begun white-labelling products in France with the launch of the Opportunité Juillet 2016. The 10-year knockout medium-term note (MTN) is listed on the Luxembourg Stock Exchange and offers 70% soft protection at maturity.
The company's products are distributed through life insurance and securities channels, according to Yoni Kabalo (pictured), a partner at i-Kapital. "The [products targeted at] life insurance companies are offered as unit-linked life wrapped notes, which wealth management advisors subsequently select for their clients' portfolios," said Kabalo. The life insurance wrapper continues to be popular in France because its allows investments in fully capital guaranteed funds in euros (though products fully guaranteeing capital for one year) and has tax advantages. "Investors can stay with the contract for several years, with tax-free capital gains at the end of the investment period," said Kabalo.
The French company is also offering Horizon Rendement, a structured note linked to the Euro iStoxx EWC 50 Index, an underlying that lowers the volatility of stocks in the index and includes a synthetic dividend that is reinvested, allowing for a higher coupon and better conditional protection. "Whereas by using Eurostoxx 50 we would have to set the barrier at 50%, with the Euro iStoxx EWC 50 we were able to set it at 70%," said Kabalo. "The more so that, with a maximum performance spread of 5% between the Eurostoxx 50 and Euro iStoxx EWC 50 over different periods, we prefer to have a barrier of 70% instead of 50%."
Although i-Kapital opted for Societe Generale as the issuer for the three own branded products it has completed so far, Kabalo said the company is fully independent from the banks it works with. "We work with all other counterparties that are present in the French market," said Kabalo. "These include counterparties issuing products eligible for life insurance (issued under the public offering of securities programme), but we also work with other securities-issuing entities. Our counterparties are chosen depending on their current issuer risk, taking into account the consistency of the issuing entity's pricing with the risk reflected by market conditions."
I-Kapital products are not targeted at a single type of client, according to Kabalo. "Depending on the product configuration, our products can be designed for corporate treasury, like in a private placement we issued last week", said Kabalo. "Apart from that, our products are offered through financial investment advisors for their clients' savings portfolios, and these are products with longer terms and strong capital protection."
Related stories:
Primonial CLN initiated by strong demand from retail clients
France Market Review - May 2016