Francois Pham-Quang, head of European equity derivatives sales at Lehman Brothers in London, has left the firm to start a fund that will securitize music industry assets. The fund, called The Music Fund, will securitize the future earnings of several types of music assets, such as catalogues of published songs. The concept is similar to The Pullman Group's securitization of royalty streams, colloquially know as Bowie bonds. However, the financial technology used will look more like mortgage-backed securities, according to Pham-Quang. He predicted the fund would start trading when it has raised USD150 million. It has seed capital of some USD30 million.
The fund will team up with an investment bank to structure and distribute the securitization once it has gathered enough assets. He added that the transaction could resemble a collateralized debt obligation with rated tranches, but the exact structure has not yet been determined. The fund would look to either do one large transaction per year or several smaller deals, but will not securitize assets until it has at least USD350-400 million in collateral.
David Pullman, chairman and ceo of the The Pullman Group in New York, said he welcomes competitors in the market, adding that so far attempts to copy the Bowie bonds model have been unsuccessful. "Talking about it and doing it are two different things," he said.
