Yieldstreet’s Larry Curran, Managing Director and Barbara Anderson, Sr. Director & Head of Underwriting were joined by David Skirzenski, CEO of Raistone Capital to discuss our newest asset class, Private Business Credit (PBC), and our first PBC offering, Supply Chain Financing I.
In the webinar, they covered:
During the webinar, we received a lot of questions from viewers that we wanted to take the time to address below.
“Mango” has requested to remain private and is a significant client of Raistone that is quickly growing to a $100 million supply chain financing facility. Yieldstreet has already funded participation in $23.5 million of that facility. The balance of the facility is funded by several other institutional investors and Raistone. This program started roughly a year ago with just a few million funded. Raistone has funded and grown the facility with roughly 50 transactions to date, with do defaults to date, now approaching $100 million.
Mango is a multi-billion dollar conglomerate that has existing senior secured lending from tier one banks (B3-stable). When businesses become this large there is a reason to remain private.
Raistone Capital was born with the vision of equalizing access to capital and meeting the demand for structured finance on a global scale. Raistone Capital began as an independent company established by Seaport Global, a full-service investment bank and broker-dealer trading over $100 billion per year with over 3000 active investor trading counter parties. This foundation, coupled with sizable equity investments from a $30 billion+ family office and the one of the world’s largest wealth managers, gives Raistone Capital access to significant levels of institutional capital and the ability to deliver on customers’ needs, from investment grade to distressed risk and from $50,000 to $500 million+. Raistone Capital continues to leverage the Seaport Global ecosystem – the broker-dealer network, the 3000+ active investor trading counter parties as well as an expert team of industry analysts and their long-standing relationships in the capital markets.
Mango has been around for decades. Over the years, the business has grown both organically and through acquisition and as a result is a conglomerate of brands. Historically, the business has performed well when using leverage instead of equity to make acquisitions. Because of the business’s historical margins in excess of 10%, they have been able to service their debt leveraged for historical acquisitions and growth initiatives. The rating agency noted that they have been historically successful in cost reduction practices that have followed historical acquisitions. That combined with the debt/EBITDA ratio less than 6x.
Additionally, the cost of supply chain financing is borne by the supplier. This is not a loan at an interest rate to Mango. Mango entered into a SFC program with Raistone. That program offers Mango’s suppliers the opportunity to be paid currently by Raistone (participation), taking a discount on the Supplier’s outstanding accounts receivables that are sitting in Mango’s trade payables. If that discount offered in the program is better pricing than a Supplier can obtain on their own, they accept the offer from the program and are funded at the agreed upon discount. Raistone files a lien on those approved accounts receivable notifying the Supplier’s other creditors. Mango benefits in that they now have one trade payable under the Irrevocable Payment Undertaking with a due date 181 days from the funding (2/3/2021).
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