Method and system for adding liquidity to alternative investment transactions

• US 20030130920A1
• Filed: 12/10/2002
• Published: 07/10/2003
• Est. Priority Date: 12/10/2001
• Status: Active Grant

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Original Assignee: Chase Manhattan International Incorporated (JP Morgan Chase & Co)
• Inventors: Freund, Peter C.
• Granted Patent: US 8,560,425 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

The invention provides a method and system for providing liquidity to an alternative investment fund. The transaction system includes a plurality of fund investors; an alternative investment fund in which the fund investors commit to the investment of “alternative investment funds,” the alternative investment fund managed by a fund manager; a structure operated in conjunction with the alternative investment fund, the structure managed by a structure manager; and a plurality of structure investors, the structure investors investing structure funds into the structure. The structure provides at least one fund investor with an option to designate cash distributions of the alternative investment fund, which are made available to the at least one fund investor, to the structure. In the system the at least one fund investor obtains a liquidation of alternative investment funds upon the designation of the cash distributions of the alternative investment fund.

Claims

1. A transaction system for providing liquidity to an equity alternative investment fund, the transaction system comprising:

a plurality of fund investors;

an alternative investment fund in which the fund investors commit to the investment of alternative investment funds, the alternative investment fund managed by a fund manager;

a structure operated in conjunction with the alternative investment fund, the structure managed by a structure manager;

a plurality of structure investors, the structure investors investing structure funds into the structure; and

the structure providing at least one fund investor with an option to designate cash distributions of the alternative investment fund, which are made available to the at least one fund investor, to the structure; and

wherein the at least one fund investor obtains a liquidation of alternative investment funds upon the designation of the cash distributions of the alternative investment fund.

2. The system of claim 1, wherein the designation of the cash distributions of the alternative investment fund, by the at least one investor, includes the designation of the initial cash distributions which are made available to the at least one fund investor.

3. The system of claim 2, wherein the initial cash distributions of the at least one fund investor are covered by an insurance wrap.

4. The system of claim 2, wherein the initial cash distributions of the at least one fund investor are evaluated by an evaluation agency, the evaluation agency providing information regarding the evaluation to the structure investor.

5. The system of claim 2, wherein the initial cash flows constitute the first twenty-five percent of cash flows once the alternative investment fund is fully funded.

6. The system of claim 1, wherein the alternative investment fund is at least one of a private equity fund and a venture capital fund.

7. The system of claim 1, wherein the fund manager and the structure manager are in active partnership to advance the alternative investment fund and the structure.

8. The system of claim 1, wherein the structure uses the form of a trust.

9. The system of claim 1, wherein the at least one fund investor is a first fund investor, the plurality of fund investors further including a second fund investor, and

wherein the second fund investor does not participate in the structure.

10. The system of claim 1, wherein the fund manager is a general partner of the alternative investment fund.

11. The system of claim 10, wherein plurality of fund investors are each limited partners in the alternative investment fund.

12. The system of claim 1, wherein the structure pools the designation of cash distributions of the alternative investment fund, which are made available to the at least one fund investor, with interests in cash flows from other alternative investment funds.

13. The system of claim 12, wherein the designation of the cash distributions of the alternative investment fund, by the at least one investor, includes the designation of the initial cash distributions which are made available to the at least one fund investor;

and

the interests in cash flows from other alternative investment funds involves the initial cash distributions of each respective other alternative investment funds.

14. The system of claim 1, wherein the structure manager provides a guarantee of any unfunded commitments in the alternative investment fund.

16. A method for providing liquidity to an alternative investment fund, the method comprising:

providing a set of contractual obligations to enforce an agreement that improves the liquidity position of an entity; and

effecting the flow of value, based on the contractual obligations, by assuring that certain value flowing, arising from an alternative investment interest controlled by the entity, will be diverted to the benefit of a liquidity provider.

17. The method of claim 16, wherein the value flowing is a cash flow.

18. The method of claim 16, wherein the alternative investment interest is an equity interest.

19. The method of claim 16, wherein the entity is a general partner of the alternative investment interest.

20. The method of claim 16, wherein the entity is a limited partner of the alternative investment interest.

21. A transaction system for providing liquidity to an alternative investment fund, the transaction system comprising:

a plurality of fund investors;

an alternative investment fund in which the fund investors commit to the investment of alternative investment funds, the alternative investment fund managed by a fund manager;

a structure operated in conjunction with the alternative investment fund;

a plurality of structure investors, the structure investors investing structure funds into the structure; and

the structure providing at least one fund investor with an option to designate cash distributions of the alternative investment fund, which are made available to the at least one fund investor, to the structure;

wherein the at least one fund investor obtains a liquidation of alternative investment funds upon the designation of the cash distributions of the alternative investment fund; and

wherein the structure pools the designation of cash distributions of the alternative investment fund, which are made available to the at least one fund investor, with interests in cash flows from other alternative investment funds.