{"id":23321,"date":"2024-11-25T14:15:42","date_gmt":"2024-11-25T14:15:42","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=23321"},"modified":"2024-11-25T14:15:42","modified_gmt":"2024-11-25T14:15:42","slug":"newmarket-capital-launches-battery-finance-bitcoin-collateralized-loan-strategy","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=23321","title":{"rendered":"Newmarket Capital Launches Battery Finance, Bitcoin-Collateralized Loan Strategy"},"content":{"rendered":"

Newmarket Capital<\/a> recently closed the first investment deal for its new Battery Finance loan strategy, which enables borrowers to incorporate bitcoin into long-term financing structures\u00a0as collateral.<\/p>\n

On November 7, 2024, Newmarket Capital, an institutional capital manager and Registered Investment Adviser completed a refinancing for the Bank Street Court apartment in Old City, Philadelphia, PA. The loan was collateralized by both the building and approximately 20 bitcoin.<\/p>\n

Newmarket Capital CEO Andrew Hohns is excited about not only setting his company\u2019s new strategy in motion but the symbolism in the deal.<\/p>\n

\u201cIt’s a building that is located less than half a block away from the first bank of the United States,\u201d Hohns told Bitcoin Magazine. \u201cPhiladelphia has had a lot of firsts and innovations over the years, and we’re proud to contribute another one to the list.\u201d<\/p>\n

How The Battery Finance Strategy Works<\/h2>\n

Battery Finance enables bitcoin to be used as 10% to 30% of the collateral for loans alongside traditional assets. To bring this new strategy to life, Newmarket Capital partnered with Ten 31<\/a> to establish Battery Finance<\/a>, a majority-owned subsidiary of Newmarket Capital that utilizes bitcoin in financing structures.<\/p>\n

Unlike other lending companies that let clients borrow against bitcoin with a risk of liquidation in the event that bitcoin\u2019s price drops below a certain threshold, Newmarket Capital removes the risk and offers loan structures without a mark-to-market trigger.<\/p>\n

\u201cAs lenders, we are constructive on the long-term value of bitcoin and comfortable recognizing bitcoin as collateral without mark-to-market risk,\u201d said Hohns.<\/p>\n

\u201cWe achieve this by incorporating bitcoin as a component of a broader collateral package alongside traditionally financeable assets. In this way, we have improved our downside through the introduction of bitcoin, an uncorrelated element \u2014 an asset that has had such a strong history of appreciation over time \u2014 in the collateral package.\u201d<\/p>\n

Deals that employ this strategy can be structured differently. In some cases, a borrower can use bitcoin they\u2019re already holding as collateral for a loan, while, in other cases, Newmarket Capital and the borrower purchase bitcoin as part of the loan\u2019s structure. The latter is how the loan for the Bank Street Court building was structured.<\/p>\n

\u201cIt\u2019s a $16.5 million building, and we offered the building owner a $12.5 million loan,\u201d explained Hohns.<\/p>\n

\u201cThe use of proceeds was to pay off the existing financing, which was $9 million, to provide them with approximately two million dollars of CapEx for certain improvements to the property they wanted to make,\u201d he added.<\/p>\n

\u201cWith the remaining $1.5 million dollars, we purchased just shy of twenty bitcoin as part of our combined collateral package.\u201d<\/p>\n

(At the time of writing, that bitcoin had already appreciated 30% in value since it was purchased for the loan.)<\/p>\n

Unlike traditional loans which often lock borrowers in with prepayment penalties or a make-<\/p>\n

whole, the Bank Street Court financing can be paid off at any time with no penalty. To allow for this outcome, the borrower and the lender align to share appreciation on the upside from the bitcoin over the life of the loan. <\/p>\n

The longer the loan is outstanding, the greater the share of bitcoin appreciation that vests for the borrower, incentivizing borrowers to take a long term view on the bitcoin.<\/p>\n

Although the loan can be repaid at any time and the building released, the earliest that the bitcoin can be wound down is four years, in line with bitcoin\u2019s four year rhythm. The loan carries a single digit interest rate and has a maturity of 10 years.<\/p>\n

Bringing Forward Bitcoin\u2019s Value<\/h2>\n

Hohns, a Bitcoiner himself, understands that other Bitcoiners have a low time preference, that they prioritize future economic well-being over more immediate gratification. However, he acknowledges that there are limits to this approach, which is why Newmarket Capital created the Battery Finance strategy.<\/p>\n

\u201cThe lowest time preference is not feasible for humans, because we have a finite life,\u201d he said.<\/p>\n

\u201cThere’s a point where we want to accomplish things with our lives. We want to grow our business or start a new business or just do the things that we all have passion for, like opening up a MakerSpace or a brewery or a bookstore \u2014 whatever the case might be. If you’re just HODLing<\/a> the Bitcoin, you’re deferring those dreams,\u201d he added.<\/p>\n

\u201cBy offering this financing tool, we can essentially serve as a mechanism to transform those time preferences, to bring forward the appreciation of the bitcoin by offering a significant amount of financing to accomplish whatever the real world goals borrowers have.\u201d<\/p>\n

Target Borrowers<\/h2>\n

Battery Finance is currently focused on working with borrowers who are interested in acquiring or refinancing commercial properties.<\/p>\n

\u201cFor the time being, we’re inviting interest around loans that are, generally speaking, $10 million to $30 million dollars, which include 10% to 30% percent bitcoin with 70% to 90% percent traditionally-financeable income-producing assets,\u201d explained Hohns.<\/p>\n

\u201cThis is a tool for both asset owners that want to redenominate some of the equity in their<\/p>\n

existing portfolio into bitcoin and its also a tool for Bitcoiners who want to obtain stable long-term financing supported in part by their bitcoin to acquire assets in the real world. This way, they can generate income and accomplish their goals while remaining invested in bitcoin.\u201d<\/p>\n

In time, Battery Finance plans to service a broader range of customers.<\/p>\n

\u201cWe see broad applicability for this lending structure, including, over time, to people that are at different phases of their Bitcoin savings journeys,\u201d said Hohns. \u201cI hope that these kinds of products will develop into solutions that enable people to do things like finance a house or automobile with their bitcoin.\u201d<\/p>","protected":false},"excerpt":{"rendered":"

Newmarket Capital recently closed the first investment deal for its new Battery Finance loan strategy, which enables borrowers to incorporate bitcoin into long-term financing structures\u00a0as collateral. On November 7, 2024, Newmarket Capital, an institutional capital manager and Registered Investment Adviser completed a refinancing for the Bank Street Court apartment in Old City, Philadelphia, PA. The […]<\/p>\n","protected":false},"author":0,"featured_media":23322,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-23321","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/23321"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23321"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/23321\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/23322"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23321"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23321"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23321"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}