Newmarket Capital has recently closed the first investment deal for its Battery Finance loan strategy, which allows borrowers to use bitcoin as collateral in long-term financing structures. 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. Battery Finance enables bitcoin to be used as 10% to 30% of the collateral for loans alongside traditional assets. Unlike other lending companies that let clients borrow against bitcoin with a risk of liquidation in the event that bitcoin’s price drops below a certain threshold, Newmarket Capital removes the risk and offers loan structures without a mark-to-market trigger.
Deals that employ this strategy can be structured differently, with borrowers using bitcoin they already hold as collateral for a loan or purchasing bitcoin as part of the loan’s structure. The Bank Street Court financing can be paid off at any time with no penalty, with the borrower and the lender aligning to share appreciation on the upside from the bitcoin over the life of the loan.
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