UBS o'connor
Heard they lend against very esoteric assets like art collections and the borrowers are HNW investors from UBS' wealth channel. Curious if anyone knows of this group and what their returns are like?
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Bump - haven't heard of this type of business model and interested in how this works.
Just learned they name their funds Clover Private Credit Opportunities. Latest fund is a 2022 vintage and they raised $1.7bn.
I am interested in learning about this strategy - if someone owns esoteric assets like art or anything else, what is the rational to collateralize those and pay interest on that loan? Nowadays, I would imagine interest rates are probably at least 8%, likely higher for stuff like this
For loans on stuff like real estate, one can renovate / make improvements on the RE, rent it out and then get a refinance loan, then use the rent to pay off the interest on the loan, while potentially getting appreciation and benefit from depreciation etc. so there would be more ways to make money, but does it work differently for esoterics?
Can esoteric assets produce cash flow? If not, wouldn't it make more sense to just sell rather than get a loan?
For starters, it ain't at 8% that's for damn sur. They are doing loans, even consumer loans, from 12% up to 20% +, especially if it is LATAM focussed. They may collateralize an asset that is non cash flowing and have PIK interest - if the borrower can't repay them then they will need to foreclose on the art work and sell it on the open market. I've seen them collateralize UHNWI's mega yaghts, real estate, most stuff under the sun.
Sounds somewhat like specialty lending groups
Also curious how these loans would make sense - is it possible for any esoterics to get cash flow? If it’s just lending on the value of the asset itself, why would people choose to borrow on a 12%+ interest loan?
No.
Thanks for shitting on my reply after you changed your idiotic question from "is this the same as special sits investing" to something more reasonable.
Lol meant specialty lending not special sits, and updated that within a minute of the original comment. Mainly was asking about the rationale of these loans rather than how to categorize
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