Introducing Pursuit
March 25, 2024
Over the past few weeks, Bryan and Prath have been working hard to try and establish a partnership with a fund that could dramatically alter the trajectory of our AUM growth for 2024 and beyond. I'm pleased to share that we have entered into a letter of intent with a group called Wingspan Capital that will aim to establish an interval fund called "Pursuit" that will deploy capital into our offerings at a scale that we have never seen before.
Overview of an Interval Fund
Structurally similar to a mutual fund, it is designed to allocate into assets and offer redemptions at predetermined intervals (quarterly, semi-annually, etc.). There's $88B outstanding right now across 90+ interval funds ranging from the well known (Blackstone, KKR, etc.) to the lesser-known (Variant, Yieldstreet, etc.). Notably, we already have two interval funds investing with us, Variant and AOG.
Overview
They are an RIA focused on niche alternative investments with over $[ ]M in AUM led by two individuals, one who was formerly the CIO of the [ ] family office and the other who was formerly the CIO of [ ] family office. The latter has been leading the effort to create this interval fund as he and his team see it as a tremendous opportunity to focus on lower middle market and generate outsized returns. They are in late stage conversations to close on $[ ]M+ in initial anchor capital within the next few months.
How It Would Work
The interval fund would be deploying ~50% of its capital into direct deals, specifically buying meaningful portions of the ones that we offer, and the remaining ~50% would be into other niche fund managers, including those that may ultimately become underwriters on Percent. They would be leading the capital raising efforts for the fund as well as diligencing managers and sourcing various niche deal flow while we would be responsible for sourcing / underwriting the majority of the direct deals. We would continue to be able to charge our fee structure for borrowers and underwriters and we'd only discount a very small fraction of our investor service fees.
The Benefit for Us
We have been in search of captive capital for a long time and this is as good a solution as any to turbocharge our growth. Assuming they do raise $[ ] this year, we will have an additional $[ ]M in capital guaranteed that needs to be deployed before year end. Their focus on asset-based deals means we’ll be able to scale our existing and soon to be launched programs more quickly and we’ll be able to bring new larger ones on the basis of capital certainty. For our efforts, we are also able to earn and vest a sizable portion of the equity interest in the fund itself that will likely pay distributions out to us which we can book as revenue down the line.
More to come in the next few weeks and months about this that we'll be able to share but this is a huge step in the right direction towards achieving record growth for us in 2024.
