Let's say I am a company that wants to sell my future semi-predictable revenue streams to a third party because I have a very strong preference for receiving cash upfront. Are there banks that broker these kind of deals? Are there funds that would buy these revenue streams? If so, which banks do this? (In many ways this is somewhat similar to selling equity in the business, but there's a number of reasons why I think this is qualitatively different and you might sometimes prefer to do one over the other.)
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You should check out Pipe... Not sure if it’s exactly what you’re looking for, but it seems inline.
https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/miami-based…
this is exactly what i am trying to do. who does pipe sell these loans to? this is basically what I am trying to figure out
Definitely players in the royalty financing space - both on the PE side (ie. music royalties, pharma royalties) as well as public cos (see Altius Minerals). Usually pretty sector specific given the different dynamics that drive the revenue streams.
Pipe seems interesting - would assume much higher cost of capital given the risk profile...
we are trying to sell a subscription to a medical service to a financing party. what are some names that do this? do you think I should target healthcare royalty financing cos? it's not really a royalty -- it's much more similar to Pipe in terms of financial structure.
Any bank that specializes in your asset class (e.g. mining, oil and gas) will be comfortable selling royalties. The more unpredictable/volatile your stream is, the steeper the discount.
The discount vs NPV (e.g. PV20) is effectively the return to the investor, so if the asset is complex the discount will likely start at 15% and run higher. On a NPV basis, this can be material for a long-dated stream. Someone else is taking risk off your hands, and they will need to be compensated for it.
in this case these are healthcare related subscriptions. these are also unusual because the asset isn't really a "royalty" but more of a risky subscription cash flow stream. should i contact a healthcare boutique? does it need to be a bulge bracket you think? should it be a bank that focuses on structured products? what are the names of banks that would be relevant?
Sounds like something a Royalty Pharma does. Check them out.
that's a good idea. thanks for the suggestion.
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This is still structured credit. All banks with a structured finance division that have decent amounts of their balance sheet allocated to esoteric structured finance (DB/JPM/BNP/BaML etc..) would be involved in this. In addition to that, look at GSO and Apollo.
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