Tiptree, A Filing For Private Vulture Fund

March 10, 2008 by Douglas A. McIntyre

Tiptree Financial Partners, L.P. has submitted a filing to sell securities, although this is not a traditional IPO.  This is a limited partnership holding company managed by Tricadia Capital that we’d describe on our own as a vulture fund.  The proposed maximum aggregate amount is listed as $139,225,455 on approximately 9.2 million LP units which the company does not intend to list on any national securities exchange, although it appears that an OTC listing may be possible. A $134 million private offering by the LP was completed on June 12, 2007.

Tiptree intends to acquire performing and distressed credit assets and related equity interests, including broadly syndicated and middle market corporate leveraged loans, mezzanine debt, unsecured debt, synthetic credit default swaps, synthetic credit indexes and tranches from synthetic credit indexes, consumer related debt and structured debt, such as ABS’s and CDO’s.   The company will also use capital to make joint ventures or acquisitions on specialty finance companies as well as alternative asset managers. Income will be generated from distributions and realized capital gains; the company generated $2.5 million in net income from June 12, 2007 to December 31, 2007.

This will be a private vulture fund, or at least the equivalent of one.  Some notable risk factors include:

  • Beginning with the third calendar quarter of 2007, there has been considerable dislocation in credit markets. If credit markets do not recover, it may not be able to implement our business strategy effectively;
  • Many assets will be illiquid or have limited liquidity, which may have limited or no resale;
  • Most assets will be rated below investment grade or unrated.

Rachel Lopez
March 10, 2008