EMERALD DIRECT LENDING FUND I, L.P. www.teamemerald.com Emerald Direct Lending Advisers Proprietary and Confidential This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers. Proprietary and Confidential Information contained herein should be used for one‐on‐one presentations only. This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers. Investing in Consumer Term Notes Presentation to National Association of Corporate Treasurers April 4, 2014 EMERALD DIRECT LENDING FUND I, L.P.
Transcript
EMERALD DIRECT LENDING FUND I, L.P.
www.teamemerald.comEmerald Direct Lending Advisers
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
Proprietary and Confidential Information contained herein should be used for one‐on‐one presentations only. This presentation, furnished on a confidential basis to the recipient, does not constitute an
offer of any securities or investment advisory services. It is intended exclusively for the use of the person to whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced
or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
Investing in Consumer Term Notes
Presentation to National Association of Corporate Treasurers
April 4, 2014
EMERALD DIRECT LENDING FUND I, L.P.
NOTIFICATION AND RISK DISCLOSURE
Emerald Direct Lending Partners, LLC (“EDLP”) and Emerald Direct Lending Advisers, LLC (“EDLA”) serve as the General Partner and
Adviser of the Emerald Direct Lending Fund I, L.P. (the “Fund”). The materials and information contained and described herein are
proprietary to EDLP, EDLA, and the Fund and may not be reproduced or distributed in any fashion without such parties’ written consent.
This presentation, furnished on a confidential basis to the recipient, is neither an offer to sell nor a solicitation of any offer to buy any
securities, investment product or investment advisory services, including interests in the Fund. This presentation is not an
advertisement and is not intended for public use or distribution and is intended exclusively for the use of the person to whom it has
been delivered by Emerald Direct Lending Advisers.
The Fund invests in consumer loans and notes originated through various online lending exchanges. Any grades or credit scoring
attached to loans are assigned by the lending exchanges. An investment in the Fund is suitable only for sophisticated investors of
adequate financial means who have no need for liquidity in this investment. There can be no assurances or guarantees that (i) the
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.2
adequate financial means who have no need for liquidity in this investment. There can be no assurances or guarantees that (i) the
Fund’s investment objectives will be realized, (ii) the Fund’s investment strategy will prove successful, or (iii) investors will not incur a
loss of principal by investing in the Fund. Prospective investors should carefully consider, with their respective financial, tax and legal
advisors, the risk factors described in the offering memorandum. Investments may lose value over time and no return is guaranteed.
This presentation is subject to a more complete description and does not contain all of the information necessary to make an investment
decision, including, but not limited to, the risks, fees and investment strategies of the Fund. Any offering is made only pursuant to the
relevant offering memorandum, together with the current financial statements of the Fund, if available, and a relevant subscription
application, all of which must be read in their entirety. No offer to purchase interests will be made or accepted prior to receipt by an
Offeree of these documents and the completion of all appropriate documentation.
This presentation does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or
participate in any particular trading or investment strategy and no representation or warranty is given with respect to any future offer or
sale. This information is not investment or tax advice or an investment recommendation.
The information including projections contained herein is generally believed to be reliable but no representation or warranty is given
with respect to its accuracy or completeness. These materials have been prepared solely for informational purposes and are subject to
change without notice.
EMERALD ASSET MANAGEMENT – “DRIVEN BY RESEARCH”
Strategies / Products
Assets Under Management
$2.8 Billion*Company
East Coast Offices: Leola, Pittsburgh & King of Prussia, PA
West Coast Office: Oceanside, CA
Founded: 1991
Employees: 43
Fundamental, bottom up, active manager
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.3
Strategies / ProductsSmall, Mid & All Cap Growth
Large Cap Core
Banking & Finance Sector
Global ETFs
Fixed Income
Alternative High Yield Income
Partial Client List
City Of Philadelphia
Illinois Teachers’
Commonwealth of Pa
Contra Costa County (CA)
Independence Blue Cross
Carpenter Technology
Indiana Hospital
Shippensburg University* As of 12/31/2013
It is not known whether the clients approve or disapprove of Emerald services provided through
its subsidiaries. Emerald did not use performance-based data to determine which clients are
included on this list. Clients were selected based upon their general name recognition and as a
representative sampling of the types of accounts managed. Performance-based data was not
used to determine which clients are included on this list. Clients were selected based on a
sampling of the types of accounts managed.
Client List Disclosure
A diversified portfolio of prime and super-prime consumer term notes
+ Monthly contractual cash flow from principal and interest
+ Targeting a 8% ‐ 11% net return1
EMERALD DIRECT LENDING FUND I, L.P. FEATURES
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
Targeting a 8% ‐ 11% net return
+ Uncorrelated to the public markets
+ Short duration1
+ Traditional asset – Fully amortizing term notes
4
1: The fund invests in fully amortizing 36 and 60 month notes. The note pool “self‐liquidates” from contractual cash flows from principal and
interest plus pre‐payments less defaults and delinquencies. The Fund have historically performed at a rate that principal investment would be
returned in less than 20 months. Actual cash flows experienced will vary based on actual interest rates, repayment rates, defaults and
delinquencies and there is no guarantee that an investment will perform as expected including potential loss of principal.
WHY CONSUMER CREDIT?
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
WHY CONSUMER CREDIT?
A $2.7 Trillion Institutional Grade Asset Class
5
WHY CONSUMER CREDIT?
10%
12%
14%
16%
1981 2012
Unsecured consumer credit yields have proven durable over a variety of interest rate
cycles and markets
Over the past 30 years,
cash yields on most
investments have
declined while interest
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.6
0%
2%
4%
6%
8%
10%
T-bills 10 yr T-
Notes
10 yr
Munis
30 yr T-
Bonds
30 yr
Munis
Consumer
Credit
Sources: Federal Reserve, Bloomberg, ValuBond
declined while interest
rates on consumer loans
and credit cards have
remained high
CONSUMER CREDIT CONSISTENT - 90 QUARTERS OF POSITIVE RETURNS
10.00
12.00
14.00
16.00
18.00
Perc
ent
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.7
Source: Federal Reserve
0.00
2.00
4.00
6.00
8.00Perc
ent
Delinquency Rate Gross Yield Net Yield
CONSUMER DIRECT LENDING
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
CONSUMER DIRECT LENDING
A New Path For Smart Money
8
PEER-TO-PEER LENDING
TRADITIONAL LENDING P2P LENDING
BANK� Loan issuance
BORROWERS
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
BANK� Borrower Aggregation
� Credit Underwriting
� Loan Issuance
� Servicing & Collections
P2P LENDING PLATFORM� Borrower Aggregation
� Credit Underwriting
� Servicing & Collections
� Loan issuance
INTERMEDIARY
SERVICES
FUNDINGDepositors Depositors Depositors
LENDING TO PRIME & SUPER-PRIME BORROWERS
Average
Credit Score
Borrower Credit ProfileLoan Purpose
Credit Card
Pay-Off
Personal
Dominant Loan Purpose is Credit Card Pay-Offs
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.10
Credit Score
684
<5
00
50
0 -
50
9
51
0 -
51
9
52
0 -
52
9
53
0 -
53
9
54
0 -
54
9
55
0 -
55
9
56
0 -
56
9
57
0 -
57
9
56
0 -
56
9
57
0 -
57
9
58
0 -
58
9
59
0 -
59
9
60
0 -
60
9
61
0 -
61
9
62
0 -
62
9
63
0 -
63
9
64
0 -
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9
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0 -
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9
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0 -
66
9
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0 -
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9
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0 -
68
9
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0 -
69
9
70
0 -
70
9
71
0 -
71
9
72
0 -
72
9
73
0 -
73
9
74
0 -
74
9
75
0 -
75
9
76
0 -
76
9
77
0 -
77
9
78
0 -
78
9
78
0 -
78
9
79
0 -
79
9
80
0+
WEAK MODERATE STRONG EXCELLENT
Target Loans
Business
Home
OtherPrime Super-Prime
DIRECT LOAN ORIGINATION PROCESS
BORROWER
INQUIRYDATA
COLLECTIONCREDIT
SCORING
DATA
+ Referred to
Website by:
+ Affiliates + Borrower
LOAN ORIGINATIONThe Fund does independent credit
analysis and portfolio optimization
The Fund makes buy/pass decision
Loans and Notes in separate SPV
LOAN UNDERWRITING ORIGINATION & SERVICING
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.11
DATA
VERIFICATIONLOAN
SERVICING
COLLECTIONS
& DEFAULTS
+ Affiliates
Partners
+ Advertising
+ Borrower
answers 6 basic
questions to pre‐
qualify (90% fail)
+ Borrower
completes
detailed online
questionnaire
+ Data collected
from IRS
database
+ Data collected
from ADP and/or
Paychex
+ Data collected
from FICO
providers
+ Lending Platform
does manual
credit verification
as necessary
+ Lending
Platforms utilize
proprietary credit
scoring models
based on FICO
and heuristic
credit variables
+ Loan is Rated &
Priced (APR)
+ Borrower provides
requested physical
data including W‐2;
tax returns; pay
stubs
+ Lending Platforms
perform manual
and automated
random data
verifications
+ Serviced by
originating Lending
Platform
+ ACH Collections
+ Payment
confirmation and
reporting to
investors
+ Cash paid to
investor accounts
+ Lending Platforms
actively call to collect
in the 1st 30 days
+ 31 – 120 days past
due collected by 3rd
party collection firms
+ 120 day charge‐off
policy
+ Ongoing collection
after default
OVER $200 MILLION IN INTERNET UNDERWRITTEN LOANS PER MONTH
Disciplined Credit Analysis
⁺ Minimum FICO Score (Prime & Super‐Prime)
⁺ Minimum monthly gross income
⁺ Size of requested loan amount
⁺ Delinquencies and charge‐offs
⁺ Utilization of aggregate credit limit
We evaluate over 15,000
loans per month
We look for:
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.12
⁺ Utilization of aggregate credit limit
⁺ Size of revolving credit line
⁺ Job consistency
⁺ Type of employment / occupation
⁺ Employer
⁺ Length of credit history
⁺ Education
• Ability to pay
• Willingness to pay
• Likelihood to pay
EDLA portfolio management team
works to identify and select mispriced credit risk
+ Traditional Asset: 3 year and 5 year fully amortizing consumer loans
+ Relatively Short Duration: 2 year – 3 year investment horizon
+ Attractive Yield: Unlevered target net returns of 8‐11% on a diversified loan pool
DIRECT CONSUMER LOANS:
SHORT DURATION, ATTRACTIVE YIELD, LOW CORRELATION
Emerald Direct Lending Advisers has identified
a potentially attractive opportunity in the consumer credit sector
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
+ Attractive Yield: Unlevered target net returns of 8‐11% on a diversified loan pool
+ Optional Monthly Income: Contractual cash flow from principal and interest payments
+ Low Volatility: Portfolio construction focuses on principal preservation
+ Non-Correlated: no exposure to public market pricing
13
The fund invests in fully amortizing 36 and 60 month notes. The note pool “self‐liquidates” from contractual cash flows from principal and interest
plus pre‐payments less defaults and delinquencies. The Fund have historically performed at a rate that principal investment would be returned in
less than 20 months. Actual cash flows experienced will vary based on actual interest rates, repayment rates, defaults and delinquencies and
there is no guarantee that an investment will perform as expected including potential loss of principal.
CONSISTENT MONTHLY INCOME FROM CONTRACTUAL CASH FLOWS
Emerald Direct Lending Fund I Monthly Income*
Year Entity Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD TTM
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.14
* Unaudited monthly income net of fees and expenses
Comparative Performance of EDLFI Portfolio vs. all Portfolios On Lending Club Platform
Emerald Direct Lending Fund I
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.15
22
Source: Lending Club Website
Chart is independently produced by Lending Club and represents their projections of portfolio net performance. It is for
informational and broad comparative purposes only. It does not represent actual Fund performance.
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.16
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
EMERALD DIRECT LENDING FUND I, L.P.
Near term cash alternative
Monthly cash income
Uncorrelated to public equity and debt markets
17
• Joe Besecker, CEO
• Scott Rehr, CAO
• Rich Juliano, CFO
• Simon Leach, VP Ops / Compliance
• Chima Narasimhan
• Joseph Witthohn, CFA
• Howard Freedland, CFA
• Andy Smith
• Richard Keller Portfolio Management
&
Strategy
Financial,
Operational, & Risk
Management
EMERALD DIRECT LENDING ADVISERS CORE TEAM
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
• Daniel Moyer, IV
• Richard Keller
• Opus Fund Services
• BDO USA, LLP
• Pepper Hamilton LLP
• Millennium Trust
• JP Morgan, Chase
Strategy Management
Sales
&
Marketing
Third Party
Support
18
Fund Objectives*:
+ Generate contractual monthly cash flow
+ Competitive yield
+ Short duration
+ Uncorrelated to equity and fixed income
markets
SUMMARY
Proprietary and Confidential
This presentation, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to
whom it has been delivered by Emerald Direct Lending Advisers, and it is not to be reproduced or redistributed to any other person without the prior consent of Emerald Direct Lending Advisers.
markets
+ Low volatility
+ Principal preservation
+ Active portfolio management
19
Emerald Direct Lending Fund I Monthly Performance*
* Unaudited monthly income net of fees and expenses. There can be no assurances or guarantees that the Fund’s investment objectives will
be realized or that the Fund’s investment strategy will prove successful. Investments may lose value over time and no return is guaranteed.
Year Entity Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD TTM
