Accredited investors and institutions can now access a new private credit solution that holds short-duration, senior secured, over-collateralized consumer and business loans providing potentially attractive yield
September 13, 2023 09:00 AM Eastern Daylight Time
JEFFERSON CITY, Mo.–(BUSINESS WIRE)–Build Asset Management (“Build”), an investment manager focused on income and risk mitigation in public and private credit markets, announces the launch of the Build Secured Income Fund I in partnership with Unchained. The Fund is one of the first direct lending private credit funds that invests in over-collateralized consumer and business loans that are backed by bitcoin. The Fund, which began raising capital in June, seeks to offer a compelling yield profile designed to support the income needs of accredited investors and institutions while simultaneously giving borrowers in the emerging bitcoin economy access to dollar capital.
“We believe the unique properties of bitcoin are only just starting to be broadly understood, and we are motivated to lead the way by providing our clients new tools like this to help achieve the investment outcomes they desire.”
“Since its invention in 2008, the Bitcoin protocol has seen steady growth and adoption across the world, and we see real potential in bitcoin serving as a widely-adopted store of value and as quality collateral,” says John Ruth, co-founder and CEO of Build. “We envision this fund’s debut as laying pivotal groundwork for seamlessly weaving bitcoin into the economic fabric of our society while using our expertise to provide investors with a unique and differentiated income solution. Such solutions are critical in today’s complex interest rate and inflation environment.”
Build believes bitcoin’s properties make it an exceptional form of collateral entirely unique in the credit space, specifically:
● Potential for improved liquidity over traditional collateral: Because bitcoin is traded 24/7 in a highly liquid market, the collateral can be liquidated in a matter of minutes in the event of a loan default, unlike real estate or other commonly collateralized assets.
● Multi-signature collaborative custody and no rehypothecation: Bitcoin’s protocol ensures distinctive custody solutions that prevent rehypothecation (the use of pledged collateral assets by banks or brokers for their own purposes) by storing the bitcoin that backs each loan in visible and transparent multi-signature addresses. With keys distributed among the borrower, loan originator and a third-party agent, this setup not only prevents single points of failure but also permits transparency for the borrower and immediate access to the collateral for the lender.
● Fixed supply of a scarce, fungible asset: Bitcoin’s scarcity,enforced by a hard cap of 21 million bitcoin to be issued ever, along with a halving of new supply every four years, may increase the attractiveness of using the asset as collateral over time.
“We founded Build to deliver solutions that improve investor outcomes in an era of disruption that probably won’t mirror the investment landscape of the last 40 years,” says Matt Dines, CFA, co-founder and Chief Investment Officer at Build. “We believe the unique properties of bitcoin are only just starting to be broadly understood, and we are motivated to lead the way by providing our clients new tools like this to help achieve the investment outcomes they desire.”
Unchained, a leader in financial services for bitcoin holders, is the originating agent and servicer of the loans purchased by the Fund. With collaborative three-party custody, 24/7 liquidity, and the transparency of the Bitcoin blockchain, Unchained’s lending operation has experienced no dollar losses since its inception in 2017. These properties make the Fund a unique and potentially appealing option for accredited investors seeking yield with a reduced risk profile when compared to private credit funds backed by other assets as collateral.
For bitcoin holders, Unchained provides a way for borrowers to access US dollar capital without the need to sell their bitcoin, which often creates a significant tax event. The typical profile of loans held in the fund are interest-only, largely between $25,000 and $100,000, with an average loan-to-value ratio of 40%. The over-collateralization coupled with a strict margin call process may help manage the risk of Bitcoin price volatility and may protect against loss of principal for investors in the fund.
The private fund is accepting new investors now as a continuous offering. Investors must qualify as accredited investors or qualified purchasers before they can enter the fund. To learn more about how to invest in the Build Secured Income Fund I, please visit: https://www.BuildBitcoin.com/.
About Build Asset Management:
Build Asset Management, LLC (a/k/a Build Asset Management and/or GetBuilding.com) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration of an investment adviser does not imply any skill or training. Build Asset Management does not provide legal or tax advice. Please consult your legal or tax professionals for specific advice.
Build was founded in 2018 with the mission of developing income and risk mitigation solutions to address an investment landscape undergoing generational changes.
Important Risk Information:
Build does not guarantee any minimum level of investment performance or the success of the Fund. Past performance does not guarantee future results. There is a potential for loss in any investment, including loss of principal invested. All investments involve risk, and different types of investments involve varying degrees of risk. Investment recommendations will not always be profitable.
Bitcoin might be a speculative asset that may encounter future regulatory changes that may adversely affect its value. Bitcoin has experienced periods of extreme volatility.
This press release does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. It is provided for information purposes only and on the understanding that the recipient has sufficient knowledge and experience to be able to understand and make their own evaluation of the proposals and services described herein, any risks associated therewith and any related legal, tax, accounting or other material considerations. To the extent that the reader has any questions regarding the applicability of any specific issue discussed above to their specific portfolio or situation, prospective investors are encouraged to contact Build Asset Management or consult with the professional advisor of their choosing.
Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.
YOU SHOULD MAKE YOUR OWN DECISION WHETHER THE FUND MEETS YOUR INVESTMENT OBJECTIVES AND RISK TOLERANCE LEVEL. THE INTERESTS ARE OFFERED ONLY TO QUALIFIED INVESTORS. THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (the “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY AN INVESTOR. NEITHER THE US SECURITIES AND EXCHANGE COMMISSION (“SEC”), ANY STATE SECURITIES COMMISSION, OR ANY OTHER REGULATORY AGENCY OR GOVERNMENTAL AUTHORITY HAS: (I) REVIEWED THE DISCLOSURES INCLUDED HEREIN; (II) APPROVED, DISAPPROVED, ENDORSED OR RECOMMENDED THE INTERESTS; OR (III) PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PRESENTATION OR THE MEMORANDUM. NO INDEPENDENT PERSON HAS REVIEWED OR CONFIRMED THE ACCURACY OR TRUTHFULNESS OF THESE DISCLOSURES, NOR WHETHER THEY ARE COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
AN INVESTMENT IN THE INTERESTS INVOLVES SIGNIFICANT RISKS. ONLY INVESTORS WHO CAN BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME AND THE LOSS OF THEIR ENTIRE INVESTMENT SHOULD INVEST IN THE INTERESTS.
Gregory FCA for Build Asset Management