WHEN THE PAST MEETS THE FUTURE A New and Exciting Opportunity Coming Your Way
Over the past 300 years, nontraditional investments have included things like lending to Greek shipbuilders, and the venerable Rothschilds, Lehmans, and Barings, who lent to foreign governments for war operations the same way James Pierpont Morgan financed the United States’ efforts domestically. Bonds were an instrument founded by Marcus Goldman, his eponymous firm being Goldman Sachs, which just turned 150 years old. In the book “The Merchant Bankers,” author Joel Wechsberg discusses some of the innovative deal-making that wealthy European families have engaged in for the past 300 years. Most people do not realize that many alternative investment conventions we use today, like venture capital and private equity, were created by wealthy European family businesses. These family businesses first started as successful merchants or industrialists, and their ability to invest in opportunities when others couldn’t earned them the name “merchant bankers.” Some merchant banking activities involve what is now called collateral-based lending: lending against an asset you hold as collateral. In the past, these were esoteric
fine art-based loans, a form of collateralized lending where families such as the Lazards would lend money to kings and governments and use their high-end art as collateral. Think museum-quality pieces such as Picasso, Rothko, Rembrandt, or Van Gogh. After all, once a country is taken over by war or other means, the first items to be carried home are those priceless works of art. They are status-enhancing, transportable, and surprisingly liquid. Today, these artworks by Picasso, Rothko, Rembrandt, Van Gogh, and other household names are still highly- coveted pieces of collateral. I’ve had the pleasure of knowing Alan Snyder for about a decade. Alan has run his own family office, called Shinnecock Partners, for 35 years and has created a bespoke investment product that provides impressively liquid passive income. During his tenure as a merchant banker and head of his own single-family office, Alan has profitably pioneered several aspects of alternative lending and has influenced platforms such as Prosper.com. If you have ever had marginal credit, you can thank Alan for inventing the Discover Card in 1985 when he was at Morgan Stanley. This card paved the way for marginal borrowers to gain access to a relatively low-interest rate credit card. His consistent track record and talent for finding opportunities are what drive his incredible success at Shinnecock. Today, his family office at Shinnecock in Beverly Hills owns and operates one of the industry’s preeminent fine art-based lending platforms. When
insurance called “Disaster Strikes Your Fine Art Collection,” which raised a few eyebrows in the established high-end fine art market, he has influenced the market to adapt to new, tighter covenants in such insurance products. He’s effectively influencing the terms and structuring the risk away from us. As a result of this tightening and controlling the market, Dandrew Partners has been able to arrange a strictly optional leveraged tranche to investors. We have put together terms to leverage the balance sheet of another single-family office (SFO) to provide a revolving debt facility on this, collateralized by the partnership’s equity into that particular tranche. Therefore, this L-Tranche will only be available to investors who have indicated that they want to be in that tranche. Leverage brings inherent risks to marriages and investment partnerships alike, so it needs to be disclosed upfront. The unlevered tranche is called the S-Tranche for Shinnecock. We’re patient and want to remind you that it takes time and brainpower to set up and let the lawyers paper the docs correctly. Sometimes lawyers don’t execute them the way you expect, and I’ll tell you why this is important in a moment. We’ve been working to set up beneficial terms for you, our investors, for close to a year now, and this is the result of our hard work. A bespoke product for affluent, sophisticated investors that provides the following: 1. Liquidity After 12 months, you can remove all or part of your initial capital contribution. You will need to send us a notice 30 days prior. 2. Optional Leverage Check the box if you want to juice your returns. Or not. 3. Quarterly Distributions This pays out cash flow distributions paid quarterly.
Alan goes into something, it’s a niche market where few players have walked the path prior.
And as a direct credit to Alan writing an academic paper on the topic of fine-art
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