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Link Alt Finance 19 11 09 Link Alt Finance 19 11 09 Presentation Transcript

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