Investment partner left firm, leaving an orphaned private investment

Below is an example of an Orphaned Private Investment.

  • Your firm invested $3,000,000 in Series B Preferred shares of HitechCo.
  • The company has gone sideways for years, barely breaking even on a cash basis.  Your position has been heavily diluted due to a play-to-play recap.  The $3,000,000 position, which was converted to common in the recap, is now worth $50,000 with no liquidity in sight.
  • The partner who sponsored the deal has left your firm, leaving you an orphaned private investment in a firm with poor prospects of generating a decent return.  Everyone at your firm is too busy to invest time in HitechCo as the position is small and all the partners have more important time commitments.
  • Your fund that invested in HitechCo is nearing the end of its life. You’d like to close out this position orphaned private investment position.
  • You have $7 million in gains from other investments in your fund this year.
  • So you sell CapGain Solutions one hundred percent of your position in HitechCo for $1,000. Thus, you realize a net loss of $2,999,000.
  • The loss offsets a portion of your other gains, thereby shielding a significant part of the gains on your distributions to your Limited Partners (and yourself as a General Partner).
As you can see, CapGain Solutions can help you monetize your orphaned private investment and shield your gains!
Orphaned Private Investment

Orphaned Private Investment