Deal Structure
- Exit Strategy: Planned for a public listing with an estimated valuation between US$70 billion to US$120 billion.
- Hurdle Rate: Set at 10% per annum, ensuring investors must achieve this minimum rate of return before fund manager profits are shared.
- Tailwind and a partner established a private fund in the Cayman Islands. Investment was done by way of purchasing partnership units in the fund. The fund then purchased in excess of US$20MM of shares via secondary private offering.
The Background: Tailwind was introduced to New York based Manhattan Venture Partners through a UK-based relationship, leading to a secondary share transaction opportunity with an established fintech company. The company had already gained a “first mover” advantage over its competitors in the “Buy Now Pay Later” industry. An existing shareholder wanted to sell a small portion of their shares via a private secondary offering.
The Deal & Funding: When the deal was brought to investors the BNPL global market stood at US$22 trillion and the borrowing company at an offering valuation of US$50B. People use BNPL for many reasons:
- To avoid paying credit-card interest.
- To make a purchase that would not fit into the budget.
- To borrow money without a credit check.
- No bank account.
Tailwind and its partners successfully secured a quota of in excess of US$20 million from MVP to facilitate a secondary share sale for a leading fintech company. Our partner in the deal established an investment vehicle in the Cayman Islands and together we were able to offer investments at smaller ticket sizes, thereby enabling a larger number of investors to benefit from the opportunity as opposed to a select few. The minimum investment size was set at US$100,000.
58 investors were added to the investment vehicle in under two months with an exit expectation in 9-12 months. The exit was planned for a public listing at an estimated exit valuation range of US$70 billion to US$120 billion. The hurdle rate for the fund was set at 10% per annum, which is the minimum rate of return that an investor must achieve before the fund manager can receive any share of profits.
