Link Alt Finance 19 11 09

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Link Alt Finance 19 11 09

  1. 1. LINK Conference Partnership Finance Chris Cook , Dunblane 19th November 2009
  2. 2. Partnership-based agreements for sharing risk and revenues 20/11/09
  3. 3. Guarantee Society and Capital Partnership 20/11/09
  4. 4. Lets look first at the Guarantee Society 20/11/09
  5. 5. In 18 European countries Guarantee Societies guarantee bank loans to members Banks 20/11/09 Guarantee Society Guarantee Loan Guarantee Members
  6. 6. ...but banks are starved of capital and have cut lending 20/11/09
  7. 7. NET uses the Guarantee Society in new ways to support any enterprise 20/11/09
  8. 8. Firstly, to support procurement..... Enterprises 20/11/09 Guarantee Society Guarantee Contract Guarantee Council
  9. 9. Secondly, to provide a mutual guarantee for credit between enterprises Buyers 20/11/09 Credit Value Sellers
  10. 10. Conventionally, sellers may give buyers interest-free credit –or time to pay Buyer 20/11/09 Credit Value Seller
  11. 11. Banks act as credit intermediaries, to provide trust through implicit guarantee 20/11/09 Bank Seller Buyer
  12. 12. Guarantee Society guarantees credit from member sellers to member buyers… Buyer 20/11/09 Pool Guarantee Guarantee Seller
  13. 13. ...with a common bond : geographical, functional, or both Buyer 20/11/09 Pool Guarantee Guarantee Seller
  14. 14. Both seller and buyer pay into a Pool for the use of the Society’s Guarantee Buyer 20/11/09 Pool Guarantee Guarantee Fee Fee Seller
  15. 15. Buyer settles credit in money, or money’s worth of Value acceptable to seller Buyer 20/11/09 Pool Guarantee Guarantee Fee Fee Value Seller
  16. 16. If a buyer defaults, Pool pays seller, and collects from buyer Buyer 20/11/09 Pool Collects Pays Seller
  17. 17. A service provider sets guarantee limits, handles defaults & manages the system Buyer 20/11/09 Pool Service Provider Services Fee Fee Guarantee Guarantee Fee Seller
  18. 18. The Guarantee Society Buyer 20/11/09 Pool Service Provider Services Fee Fee Guarantee Guarantee Fee Value Credit Seller
  19. 19. Banks act as service providers not as middlemen 20/11/09
  20. 20. Capital Partnership – direct investment in production or revenues 20/11/09
  21. 21. Conventional investment is Equity in Limited Companies 20/11/09
  22. 22. ....a 19 th Century legal dinosaur 20/11/09
  23. 23. ...or Debt - loans secured by legal claims eg mortgages 20/11/09
  24. 24. ...giving two conflicting claims over the same productive asset 20/11/09
  25. 25. But there’s a new furry animal out there.... 20/11/09
  26. 26. ...the 21 st Century UK Limited Liability Partnership (LLP) 20/11/09
  27. 27. An LLP is a corporate body with limited liability.... 20/11/09
  28. 28. ...and...errrr...that’s it!... 20/11/09
  29. 29. As far as the Tax Man is concerned it is a Partnership 20/11/09
  30. 30. Capital Partnership Capital Partnership Investors Customers Custodian % % £ 20/11/09 Managers
  31. 31. Equity Shares - % age shares in revenues or production... 20/11/09
  32. 32. ...or Units - redeemable in production 20/11/09
  33. 33. Example: “The Art of Flirting” – a film incorporated as an LLP 20/11/09
  34. 34. The actors received nth’s of the gross revenues... 20/11/09
  35. 35. ...I got 5%...and the producer the rest... 20/11/09
  36. 36. ...except that we needed lights, cameras, pizza, coffee 20/11/09
  37. 37. Two Capital Partners invested £10k for 20% of revenues 20/11/09
  38. 38. ...if there are any 20/11/09
  39. 39. Art of Flirting Partnership Art of Flirting Partnership Financial Capital (Investors) Viewers Custodian % % £ 20/11/09 Human Capital (Actors, Producer, Me)
  40. 40. Everyone was on the same side 20/11/09
  41. 41. Example: Albion Trust...a charity 20/11/09
  42. 42. ..which provides affordable office space for social enterprises 20/11/09
  43. 43. ...due to demand they bought a disused church next door 20/11/09
  44. 44. ...and planned a £4m development 20/11/09
  45. 45. But if they borrow, the rents will be unaffordable 20/11/09
  46. 46. Solution? An Albion Partnership? Albion Partnership Investors Tenants Custodian % % £ 20/11/09 Managers
  47. 47. The Capital Partnership aligns stakeholder interests.... 20/11/09
  48. 48. ...but it’s not a magic bullet 20/11/09
  49. 49. Conventional finance requires binding contracts 20/11/09
  50. 50. Partnership finance requires consensual agreement 20/11/09
  51. 51. But there may be no magnetism.. 20/11/09
  52. 52. ...or partners may fall out... 20/11/09
  53. 53. A Capital Partnership is not an Organisation 20/11/09
  54. 54. ...it does not own anything, do anything, employ anyone, or contract with anyone... 20/11/09
  55. 55. ...it is simply a framework within which the stakeholders self organise ... 20/11/09
  56. 56. A Master Partnership Master Partnership Financial Capital (Money, IP etc) Users Custodians % % £ 20/11/09 Human Capital ( Developers, Operators)
  57. 57. … .is a simple new framework for sharing resources
  58. 58. Maybe a LINK Partnership? LINK Partnership Financial Capital (Assets, IP etc) Users Custodians % % £ 20/11/09 LINK Members ( Developers, Operators)
  59. 59. Thank You 20/11/09

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