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Private Equity's Slump Drives a Firm Prepared to Provide Cash

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Whitehorse Liquidity Partners Offers Innovative Solution for Private Equity Investors

Private equity investors facing challenges in raising cash during a downturn can find a solution in Whitehorse Liquidity Partners. Yann Robard, the founder of Whitehorse, has introduced a unique approach that provides investors with a cash advance tied to their stakes in exchange for a share of the upside on their holdings. This concept, developed by Robard after a 600-mile bike ride in 2014, utilizes preferred equity financing to create liquidity. With $13.5 billion of commitments and a roster of blue-chip clients, Whitehorse has established itself as a leader in this space.

How It Works

Whitehorse offers investors cash equal to around 70% of the net asset value of their private equity portfolios. This portion is designated as a preferred tranche, while the investor retains a 30% tranche as common equity. The preferred tranche receives cash flows from the underlying portfolio before the common equity holder, and Whitehorse receives a small percentage of future returns tied to increases in the portfolio's market value. Alternatively, Whitehorse may buy the stakes outright at a discount and package the portfolio with other private equity assets.

Risk Factors

While this innovative approach has gained traction, there are inherent risks involved. Cash flows are tied to expected distributions from private funds, which may be impacted by higher rates and lower valuations. Additionally, the value of the holdings backing Whitehorse's preferred tranches could drop sharply in challenging market conditions. However, Whitehorse takes these risks into account when structuring its deals.

A Proven Track Record

Whitehorse's success is evident in its track record. While its early funds faced challenges due to stressed assets, subsequent funds have reported internal rates of return exceeding 16%. Investors have recognized the value of this unique financing approach, with billions of dollars being invested in Whitehorse's funds.

A Visionary Approach

Yann Robard's vision and entrepreneurial spirit have propelled Whitehorse to the forefront of the private equity industry. His unconventional start and determination to provide a solution for investors have led to the development of a successful business model. With a focus on preferred equity financing, Whitehorse is reshaping the way private equity funds are perceived and providing a valuable avenue for investors to access liquidity. In conclusion, Whitehorse Liquidity Partners offers a compelling solution for private equity investors seeking cash in challenging market conditions. Through its innovative approach, Whitehorse has established itself as a leader in preferred equity financing, providing investors with liquidity while maintaining their equity positions. As the industry continues to evolve, Whitehorse's visionary approach is likely to shape the future of private equity investing.

Implications of Whitehorse's Innovative Solution for New Businesses

Whitehorse Liquidity Partners' innovative approach to providing liquidity to private equity investors could have significant implications for new businesses, particularly those in the finance sector. The unique model, which offers cash advances tied to investors' stakes, presents an alternative way of raising capital during economic downturns.

Revolutionizing Private Equity Financing

The concept of preferred equity financing, as introduced by Whitehorse, could revolutionize the way new businesses perceive and approach private equity funds. This model could potentially open up new avenues for businesses to access liquidity while maintaining their equity positions.
Understanding and Mitigating Risks
While Whitehorse's approach has gained traction, it also comes with inherent risks, such as fluctuations in cash flows and the potential for sharp drops in the value of holdings. New businesses must take these risks into account when considering similar financing models and ensure they have robust risk management strategies in place.

Learning from a Proven Track Record

Whitehorse's success, as evidenced by its impressive track record, offers valuable lessons for new businesses. The company's ability to overcome early challenges and achieve high internal rates of return demonstrates the importance of perseverance, strategic planning, and innovative thinking. In conclusion, Whitehorse's visionary approach to private equity financing could significantly influence the strategies of new businesses in the finance sector. As the industry evolves, businesses that adapt and adopt innovative financing models like Whitehorse's are likely to stay ahead of the curve.
Story First Published at: https://financialpost.com/pmn/business-pmn/private-equitys-slump-propels-a-firm-thats-ready-to-offer-cash
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