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alternative investments

Published on
3 mins read

HarbourView Secures $500 Million to Fuel Music Industry Investments

harbourview

HarbourView Equity Partners, a leading investment firm in the sports, media, and entertainment space, has secured nearly $500 million in debt financing. This significant capital injection aims to propel the company’s expansion within the music industry.

The financing is unique as it leverages a strategy called “private securitization.” HarbourView’s existing portfolio of music royalties is essentially repackaged into financial instruments similar to bonds, attracting investments. This innovative approach demonstrates the value of intellectual property, particularly music rights, as a viable source of financial backing.

KKR, a renowned investment firm, spearheaded the financing, showcasing strong market interest in asset-based financing strategies, specifically within the entertainment sector. Participation from investment accounts advised by Kuvare Asset Management further bolsters the deal’s significance.

“We are thrilled to partner with KKR on this creative financing solution,” said HarbourView Founder and CEO Sherrese Clarke Soares. “This capital will empower us to pursue exciting new opportunities in the music industry while ensuring creators receive proper recognition for their contributions.”

This $500 million boost comes on the heels of HarbourView expanding its credit facility by $300 million in December 2023. Since its inception in 2021, the company has reportedly amassed $1.6 billion in managed assets and acquired over 50 music catalogs.

The debt financing strengthens HarbourView’s foothold in the music investment landscape. The additional capital allows them to:

  • Invest in new music assets and companies: This could involve acquiring music rights, funding music ventures, or partnering with music creators.
  • Capitalize on the growing music market: The music industry continues to experience significant growth, presenting lucrative investment opportunities.
  • Validate the potential of intellectual property: The deal underscores the financial viability of music rights as collateral, potentially paving the way for similar financing structures in the future.

This deal signifies a potentially significant shift in music industry financing. Traditionally, music rights haven’t held the same weight as tangible assets when seeking capital. However, HarbourView’s success in leveraging their music portfolio for debt financing demonstrates a growing acceptance of intellectual property as a valuable asset class. This could open doors for smaller rights holders and independent artists to explore similar financing options in the future.

Furthermore, the participation of prominent firms like KKR indicates growing institutional investor interest in the music sector. This increased investment activity could lead to a more robust music rights market, potentially benefiting creators through fairer valuations and increased opportunities for monetization.

It’s crucial to monitor the long-term effects of this financing approach. While it presents exciting possibilities, potential risks like overvaluation of music rights or complex financial structures warrant close observation.

by Tony O. Lawson

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Published on
4 mins read

Diverse Private Equity Firms Outshine Benchmarks, Raising Questions About Underinvestment

NAIC

A recent report by the National Association of Investment Companies (NAIC) has reignited the conversation surrounding diverse-owned private equity firms and their consistent outperformance of industry benchmarks.

Titled “Examining the Returns 2023: Further Evidence of Diverse-Owned Private Equity Firm Outperformance,” the report paints a compelling picture of the expertise and potential within this often-overlooked segment of the investment world.

The report arrives against a backdrop of evolving demographics in the United States. While recent news cycles may paint a picture of heightened public discourse around diversity, the actual landscape is far more nuanced. Based on the 2020 Census, the U.S. population is diversifying rapidly, particularly among younger generations.

The Brookings Institute, analyzing early Census data, found that while 40% of the total population is now considered diverse (up from 30% two decades ago), this figure rises to near parity among those under 16. Similarly, the Census Bureau’s Diversity Index, indicating the probability of two random individuals belonging to different racial or ethnic groups, jumped to 61.1% in 2020, a significant increase from 2010.

This demographic shift underscores the increasing relevance of diverse perspectives in various sectors, including private equity. The NAIC report highlights the superior performance of diverse-owned PE firms:

Superior Returns

From 1998 to September 2022, diverse PE funds (represented by the NAIC Private Equity Index) generated a net Internal Rate of Return (IRR) of 17.23%, a net Total Value to Paid-In (TVPI) of 1.68x, and a Distribution to Paid-In Capital (DPI) of 0.66x. These figures significantly surpass the industry benchmarks established by The BURGISS Group.

Outperforming the Median

The NAIC Private Equity Index consistently outperformed the median BURGISS fund across various metrics. For instance, when comparing IRR by vintage year, diverse PE funds outperformed the BURGISS Median Quartile in 66% of the years studied.

Top Quartile Performance

Notably, the NAIC Private Equity Index performed in the top two quartiles (first or second) 72.2% of the time, with 31% of the funds even achieving top quartile net IRRs during the entire period.

These findings challenge the long-held notion that investing in diverse-owned firms comes at the cost of sacrificing returns. In fact, the data suggests the opposite. By allocating capital to diverse PE firms, institutional investors have the potential to not only enhance their returns but also fulfill their fiduciary duty by considering a wider range of investment opportunities.

Despite the clear evidence, the report also highlights a concerning reality: diverse managers manage less than 2% of the industry’s total assets. This underinvestment persists despite the consistent track record of superior performance documented in the NAIC report and previous studies.

As the financial services industry evolves, the call for inclusivity extends beyond moral considerations. The evidence presented in the NAIC report suggests that embracing diversity is not just the right thing to do, but also a strategic and financially sound decision.

By recognizing the talent and potential within diverse-owned firms, investors can unlock significant value for themselves and contribute to a more equitable and prosperous investment landscape.

by Tony O. Lawson

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Published on
4 mins read

Infrastructure Investing 101: Building Wealth for the Future

Infrastructure investing

From the Bipartisan Infrastructure Law to major industry deals like Blackrock’s $12.5 billion acquisition of infrastructure investment firm Global Infrastructure Partners, several catalysts are propelling infrastructure investing into the spotlight.

This asset class has garnered attention for its ability to deliver stable returns, diversify portfolios, and contribute to societal progress, making it an increasingly attractive option for investors seeking a meaningful impact.

What is Infrastructure Investing?

Infrastructure investing involves allocating capital towards the development, maintenance, and operation of essential physical structures and systems that support society’s functioning and economic activity. These assets can span various sectors, including transportation (roads, bridges, airports), energy (power plants, pipelines), utilities (water, sewage, telecommunications), and social infrastructure (schools, hospitals).

Key Characteristics of Infrastructure Investments:

  1. Long-term Revenue Streams: Infrastructure assets often generate stable and predictable cash flows over extended periods. This stability is attributed to factors like long-term contracts, regulated pricing mechanisms, or essential service provision, reducing revenue volatility compared to other investments.
  2. Inflation Hedge: Many infrastructure investments offer protection against inflation. Contracts often include provisions for periodic price adjustments, ensuring that revenue streams keep pace with inflationary pressures, thus preserving real returns for investors.
  3. Diversification Benefits: Infrastructure investments typically exhibit low correlation with traditional asset classes like stocks and bonds. Adding infrastructure to an investment portfolio can enhance diversification and reduce overall portfolio risk.
  4. Economic Growth Catalyst: Infrastructure development is closely linked to economic growth. By investing in infrastructure projects, investors not only stand to benefit from potential financial returns but also contribute to societal progress, job creation, and improved living standards.

Benefits of Infrastructure Investing:

  1. Stable and Predictable Returns: Infrastructure assets often generate steady income streams, providing investors with reliable cash flows over the long term.
  2. Inflation Protection: Infrastructure investments can act as a hedge against inflation, as they often have built-in mechanisms to adjust prices in line with inflationary pressures.
  3. Diversification: Infrastructure assets have historically shown low correlation with traditional financial markets, making them an attractive addition to diversified investment portfolios.
  4. Potential for Economic Growth: Investing in infrastructure can drive economic development by improving productivity, enhancing connectivity, and fostering innovation.

Getting Involved in Infrastructure Investing:

Investors can access infrastructure investments through various avenues, including:

Direct Investments: Investing directly in infrastructure projects or assets, either independently or through partnerships, allows investors to have more control over their investments but may require substantial capital and expertise.

Infrastructure Funds: Investing in infrastructure-focused funds managed by professional asset managers provides diversification across a range of infrastructure assets and sectors. These funds offer access to infrastructure investments with lower minimum investment requirements and professional management expertise.

Publicly Traded Infrastructure Companies: Investing in publicly listed infrastructure companies, such as utilities, transportation companies, or infrastructure REITs (Real Estate Investment Trusts), allows investors to gain exposure to infrastructure assets through publicly traded securities.

 

Disclaimer: The information in this article is for informational purposes only and should not be considered as financial advice. Investing in infrastructure carries risks, including market fluctuations and regulatory changes. Readers should conduct their own research and consult a qualified financial advisor before making investment decisions.

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Published on
3 mins read

Adebayo Ogunlesi’s Infrastructure Fund Acquired by BlackRock for $12.5 Billion

Adebayo Ogunlesi

In a groundbreaking move poised to redefine the global infrastructure landscape, BlackRock, the world’s largest asset manager, has entered into a monumental deal to acquire Global Infrastructure Partners (GIP) for a staggering $12.5 billion.

Global Infrastructure Partners (GIP) is a leading infrastructure investor that specializes in investing in, owning, and operating some of the largest and most complex assets across the energy, transport, digital infrastructure, and water and waste management sectors.

The agreement, expected to be finalized in Q3 2024, involves a payment of $3 billion in cash and approximately 12 million shares, valued at around $9.5 billion based on January 11 closing prices.

At the forefront of this strategic merger is Adebayo Ogunlesi, the Chairman and CEO of Global Infrastructure Partners. Ogunlesi, along with four founding partners, leads the GIP management team, playing a pivotal role in guiding the combined infrastructure platform. As the Chairman and CEO of GIP, Ogunlesi is strategically positioned to navigate the integration of GIP and BlackRock operations, expanding his influence beyond the boardroom to orchestrate a consolidation that maximizes synergies while minimizing disruption.

The significance of this deal is underscored by its timing, making it BlackRock’s largest transaction since the acquisition of Barclays Global Investors in 2009. This strategic move reflects BlackRock’s ambition to solidify its position in the rapidly expanding market for private and alternative assets.

The GIP management team, under Ogunlesi’s leadership, is not only instrumental in the merger but also represents a continuation of GIP’s legacy in infrastructure funds management. GIP currently oversees a portfolio valued at about $100 billion, with companies within its equity portfolio collectively generating an impressive annual revenue of $80 billion. Notable assets in GIP’s portfolio include Gatwick Airport, London City Airport, Port of Brisbane, Port of Melbourne, Sydney Airport, and the Ruby Pipeline, a 680-mile gas pipeline in the US.

This strategic partnership between BlackRock and GIP is more than a mere acquisition; it’s a calculated alliance leveraging the strengths of both entities. BlackRock gains immediate access to GIP’s proven expertise and established portfolio, while Adebayo Ogunlesi secures his legacy by assuming a crucial role in the newly formed entity.

The $12.5 billion BlackRock-GIP merger is set against the backdrop of a growing trend in the alternatives market. Infrastructure has emerged as a lucrative investment opportunity as investors seek to profit from addressing a projected $15 trillion spending gap in global infrastructure by the end of the decade, as projected by McKinsey consultants.

This strategic partnership holds the promise of driving innovation, democratizing access to investments, and prioritizing sustainability in the global infrastructure landscape. With Adebayo Ogunlesi’s visionary leadership and the backing of the GIP management team, the BlackRock-GIP alliance sets the stage for a future built on vision, expertise, and a commitment to shaping a more connected and sustainable world.

by Tony O. Lawson

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Published on
9 mins read

Unveiling Alternative Investment Opportunities in Real Estate

Alternative Investment

In the ever-evolving landscape of real estate, savvy investors are increasingly seeking alternative avenues to diversify their portfolios and maximize returns. As the demand for creative investment solutions continues to surge, a distinguished panel of experts is set to take center stage at the highly anticipated Diversity in Commercial Real Estate Conference, scheduled from July 27 to 30, 2023.

On the 28th of July, a panel of real estate trailblazers will converge to shed light on “Alternative Investment Opportunities” in the real estate sector. This panel includes Osei Rubie, President of National Standard Abstract and Reside in Opulence; Vernon J., founder of EquityCoin and Maurice Russell Grey, co-owner of ESRA Realty.

Navigating this insightful discussion as the moderator will be Leonard Smith, a Managing Partner at East Chop Capital. The panel promises to be a compelling blend of knowledge, experience, and foresight, sharing invaluable insights into three distinct areas of alternative investments.

Interviews

Prior to their upcoming panel session, we had the chance to catch up with several panelists to explore their noteworthy investment deals and how these align with the world of alternative investing. These insightful interviews offer a glimpse into the expertise they will bring to the table on the 28th of July.

Osei Rubie

Alternative Investment

Reside in Opulence has achieved notable success in the luxury short-term rental market. Could you share a specific project or success story that exemplifies the potential returns and growth opportunities in this alternative real estate investment niche?

In 2019, we acquired our first property in Edgartown, Martha’s Vineyard for $685,000. Leveraging insights from the established Black Eco System of property owners on the island of Martha’s Vineyard following “best practices” shared by friends and owners, we elevated the renter’s experience with branded bathrobes and towels.

Our goal is to create tailored luxury experiences for our renters. A successful renovation project allowed us to command over $1,000 per night, significantly higher than the previous rental income. In 2022, we sold the property for an impressive $1.5 million, demonstrating the lucrative potential of this alternative real estate investment niche.

In addition to short-term rentals, you have also achieved success in the title insurance industry, approaching $3 billion in closed deals. Can you share a notable deal that you believe demonstrates the potential of alternative investment opportunities in commercial real estate?

A notable example of the potential in alternative investment opportunities in commercial real estate is the Glenmore Manor Development Project in Brownsville, Brooklyn.

This transformative project includes the development of 233 units of affordable housing, almost 19,000 square feet of commercial/ retail space, and a community facility to support future entrepreneurs. The successful closure of this ambitious $175 million deal in June 2023 marks one of our largest transactions this year.

The Glenmore Manor Development Project not only demonstrates the potential for significant financial returns but also showcases the positive impact real estate investments can have on revitalizing communities and fostering economic development. Our team of title insurance experts at NSA was grateful to work on this monumental project.

Vernon J.

Alternative Investment

Affordable housing is a pressing issue globally. How does EquityCoin® address the challenges associated with funding and financing affordable housing projects?

As the first digital token backed by government voucher-based affordable housing, EquityCoin® houses families in danger of becoming homeless, while offering local community members the ability to own fractions of real estate equity. Through the use of Crowdfunding and Real Estate Tokenization, shareholders gain access to residual cash flow and benefit from the increased liquidity that blockchain technology provides.

We’ve white-labeled our system by developing a Crowdfunding and Tokenization platform called EquityShare, which allows community developers all over the country to raise up to $5M for their affordable housing project and tokenize their equity so that everyday investors can build generational wealth through fractionalized real estate.

What unique advantages does the use of digital tokens on the blockchain offer in terms of transparency, accessibility, and scalability?

Blockchain is a revolutionary technology disguised as a casino. Many people are caught up in the ‘hype’ of the wild crypto price swings, while unaware of the efficiencies that the underlying tech is bringing to traditional markets such as real estate investing.

By placing financial systems on the blockchain, there is increased transparency as all transactions are recorded on an immutable ledger, dividend payments are streamlined, and real estate syndicators have an incredibly clean way to manage their investor base. I see blockchain as the internet of accounting, transforming antiquated spreadsheet models into dynamic chains of value.

Maurice Russell Grey

Alternative Investment

ESRA Realty has facilitated over $30 million in property sales and has been actively involved in various types of real estate transactions. Could you shed light on the particular focus or niche that your company has carved out within the Harlem market?

Our firm was founded in 1929, by my Grandmother and her 2 sisters, who immigrated from Guyana in the 1920s. We are currently the oldest Black owned real estate company in NYC. The period of the late 20’’s to early 30’s in Harlem is commonly referred to as the Great Migration, because thousands of Blacks from the South and the Caribbean flooded NYC and desperately needed housing.

This led to a boom in Harlem and the period knowns as the Harlem Renaissance. For almost the last 100 years we have provided valuable housing services such as helping Blacks buy properties when it was extremely difficult to do so, helping them get financing, and assisting them in managing their properties. We are experts in the Harlem, market selling everything from HDFC coops, to luxury brownstones, to multifamily apartment buildings.

Could you share a specific example of an alternative real estate investment project that you have been involved in and explain how it presented unique benefits or challenges compared to traditional investments?

Our company was heavily invested in multifamily real estate in Harlem, and during the late 2000s through 2020, Harlem properties experienced a boom in value. The problem was, the cash flows on the properties were no longer in line with the high perceived values.

We were able to sell several of those multi-family properties at peak value and move them into the triple net sphere which doubled our cash flows. Triple net is a completely different realm than multi-family, very hands off, and you aren’t able to force appreciation like multifamily, but it has its benefits, which include large residual incomes, backed by corporate credit. Real estate is by definition cyclical, so it’s always important to remain flexible and keep up to date on other avenues within real estate. There will be a point when you need them.

by Tony O. Lawson

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Published on
6 mins read

HarbourView Equity Partners: The Entertainment Asset Investing Firm to Watch

HarbourView Equity Partners

In recent years, there has been a growing trend of private equity firms and other investors acquiring music rights. This is driven by a number of factors, including the increasing value of music assets, and the growing demand for music streaming services.

According to reports, the global music streaming market size is expected to reach $103.07 billion by 2030. It is expected to expand at a CAGR of 14.7% from 2022 to 2030.

This growing interest can be seen as a positive trend for the music industry. It signifies a heightened demand for music and acknowledges the importance of compensating artists and songwriters for their creative endeavors. Additionally, this trend creates new opportunities for investors to participate in and contribute to the music industry.

HarbourView Equity Partners is a global investment firm focused on investment opportunities in the entertainment and media space. The firm was founded in 2021 by Sherrese Clarke Soares, a veteran investment banker with over 20 years of experience in the entertainment and media industry.

HarbourView Equity Partners
Sherrese Clarke Soares

HarbourView Equity Partners’ investment strategy is to acquire music rights from artists and labels, and then leverage those rights in a variety of ways. This includes licensing the music for use in films, television shows, and commercials; creating new derivative works from the music; and distributing the music through digital platforms.

Since launching in 2021, the firm has acquired a diverse portfolio featuring thousands of titles spanning numerous genres, eras, and artists, and comprising over 20,000 songs across both master recordings and publishing income streams.

This month alone, HarbourView Equity Partners has made at least two high-profile acquisitions of music assets. Yesterday, the firm announced the acquisition of a royalty income stream of select recorded music assets from  Grammy-winning rapper, Nelly. The deal included some of Nelly’s most popular tracks, such as “Hot in Herre” and “Dilemma.”

Nelly

In a press release, Clarke Soares said, “This catalog has made an incredible impact on generations of fans. Works such as, ‘Hot in Herre’ and ‘Shake Ya Tailfeather’ defined an era of music of a unique blend of hip-hop, R&B, and country music that is undeniable. We are thrilled to add these influential pieces to our repertoire and work with the team to continue supporting the artistry within our ecosystem.”

That same day, the firm also announced that it had reached an agreement with Wiz Khalifa, for a portion of his catalog. The deal includes “See You Again,” “Black and Yellow,” and “The Thrill,” and spans “the rapper’s prolific career across dozens of albums, mixtapes, and collaborations with some of the biggest names in entertainment.” The financials of this exchange have yet to be revealed.

Wiz Khalifa

Clarke Soares spoke on the acquisition. “Wiz Khalifa has already made a profound impact on culture as a musician, executive, media visionary, and creative force,” she said. “We celebrate his talent and creativity and are thrilled to welcome him and his team to the HarbourView family today.”

Wiz Khalifa himself added, “Sherrese and HarbourView truly understand the value of music and artistry. We are excited to partner with them as they continue to build a dynamic media company that is in line with the values and goals we all have here.”

In addition to music assets, HarbourView Equity Partners also invests in other types of entertainment assets. In March, the firm made its first major investment in the film and TV space, announcing its investment in MACRO, the multi-platform media company, founded by Charles D. King.

This deal brings together two respected Black-owned businesses in the entertainment world. Both Soares and King share a common vision of promoting diversity and authenticity in content creation.

Harbourview’s investment is part of a new $90+ million investment in MACRO. The investment capital will be used to scale and expand operations across MACRO’s existing business verticals, and diversify its revenue streams.

The entertainment industry is constantly changing, but one thing that remains constant is the demand for music. As new technologies emerge and new ways of consuming music are developed, the value of music rights is only likely to increase.

by Tony O. Lawson

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