Author Topic: Direct Lending Investments  (Read 11884 times)

standby

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Direct Lending Investments
« on: December 31, 2014, 02:22:13 AM »
Anyone investing in this?  If so how does it work exactly?  I know what they do but do you sign up for an account there or buy their fund through an investment firm?  Are you happy so far?

brycemason

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Re: Direct Lending Investments
« Reply #1 on: December 31, 2014, 03:02:59 AM »
It's an investment fund for accredited investors only. You have to meet certain suitability criteria. You ask the general partner for a private placement memorandum that lists out how everything works, and then if you choose to invest you sign some subscription documents and wire your money to a custodian. The fund reports account values monthly, along with a letter from the GP. I've invested since May 2013; been a solid performer with little variance.

Fred93

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Re: Direct Lending Investments
« Reply #2 on: December 31, 2014, 04:10:49 AM »
Bryce, I know you are fully capable of doing this direct.  Why did you choose to go thru a middleman?

brycemason

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Re: Direct Lending Investments
« Reply #3 on: December 31, 2014, 10:47:08 AM »
In early 2012 I read about Brendan on this website and found he lived in the LA area. I reached out and we've talked ever since. I followed his creation of the fund, we've debated many points about P2P, and he's provided advice and encouragement. So, the answer to your question is that I wanted to support his venture and because it was easy to do. I also believe I am getting more diversification than I would on my own in that particular space.

standby

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Re: Direct Lending Investments
« Reply #4 on: December 31, 2014, 02:07:12 PM »
Thanks Bryce.  I am assuming that could be custodian of an IRA as well.  Minimum $50K investment?

RazzleDazzle

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Re: Direct Lending Investments
« Reply #5 on: December 31, 2014, 07:32:42 PM »
It's an investment fund for accredited investors only. You have to meet certain suitability criteria. You ask the general partner for a private placement memorandum that lists out how everything works, and then if you choose to invest you sign some subscription documents and wire your money to a custodian. The fund reports account values monthly, along with a letter from the GP. I've invested since May 2013; been a solid performer with little variance.

Thanks for the post Bryce. Question though, I believe brendan has an LLC that is then a GP of the investment fund. Being the GP, are they taking the full liabiliaty? and once one signs the PPM and subscription documents they become limited parneter to which GP returns updates monthly? Just wondering.

More of a laissez faire approach indeed.

brec

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Re: Direct Lending Investments
« Reply #6 on: December 31, 2014, 09:22:11 PM »
Thanks Bryce.  I am assuming that could be custodian of an IRA as well.  Minimum $50K investment?

I'd be surprised were there were an IRA custodian that allows investments in hedge funds, but I have no expertise in retirement accounts.

According to an article in Investment News dated Aug. 15, 2014, the minimum is $100,000.

brec

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Re: Direct Lending Investments
« Reply #7 on: December 31, 2014, 09:39:34 PM »
... I believe brendan has an LLC that is then a GP of the investment fund. Being the GP, are they taking the full liabiliaty? and once one signs the PPM and subscription documents they become limited parneter to which GP returns updates monthly? ...

Yes, in most circumstances the GP bears legal liability for the actions and debts of a Limited Partnership.  The risk of a limited partner is limited to the amount invested. Per Bryce, "the fund reports account values monthly, along with a letter from the GP"; not sure what your question is there.

RazzleDazzle

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Re: Direct Lending Investments
« Reply #8 on: December 31, 2014, 09:50:15 PM »
Thanks for the reply. Was confirming if an investor loses money in the fund (loans start going bad) does Brendan (likely the LLC thats the GP) bears responsiblity?

brec

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Re: Direct Lending Investments
« Reply #9 on: January 01, 2015, 10:09:22 AM »
Thanks for the reply. Was confirming if an investor loses money in the fund (loans start going bad) does Brendan (likely the LLC thats the GP) bears responsiblity?

If I understand the question correctly: no, the GP is not responsible for "insuring" the investors against bad investments. If the fund loses money, it's losing its investors money and the GP is not liable to make up those losses.

What limited liability means is that if the fund loses more than its investors' money, e.g., by buying loans with money borrowed from banks in addition to the investors' money, and then loses a ton, the banks can't come after the investors. The risk of a limited partner (LP) is limited to his/her investment -- the LP can't lose more than that -- but the LP can lose (potentially, worst case) all of that.

RazzleDazzle

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Re: Direct Lending Investments
« Reply #10 on: January 01, 2015, 11:45:41 AM »
Thanks for the clarification Brec. Makes sense.

standby

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Re: Direct Lending Investments
« Reply #11 on: January 21, 2015, 11:43:38 PM »
Does anyone know, I thought they were small, short-term loans and then I read about the $250M over three year investment in Biz2Credit.

http://www.wtvm.com/story/27728782/direct-lending-investments-commits-250-million-to-biz2credits-marketplace-lending-platform-to-purchase-small-business-loans

I saw something else somewhere too.  Sure, it makes sense being a related business, partnering and all, but I thought they loaned up to something like $1M.  I didn't realize they were that big of a fund.

But that's a lot of venture capital, basically, right?  Now it's seeming more risky.  Anyone have any thoughts on this?

Kombinator

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Re: Direct Lending Investments
« Reply #12 on: January 22, 2015, 09:57:30 AM »
They are not that that big, it is called good fund PR:) They make these announcements that they commit up to 100MM, 250MM etc, the a mount actually invested can be 10MM and still not be a lie.

RazzleDazzle

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Re: Direct Lending Investments
« Reply #13 on: January 22, 2015, 12:28:26 PM »
Yep. Exactly. Future commitment. May not happen.

standby

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Re: Direct Lending Investments
« Reply #14 on: January 22, 2015, 01:27:24 PM »
Thanks guys.