WO2018118990A1

WO2018118990A1 - Digital platform for creating instantaneous income generating private equity portfolios.

Info

Publication number: WO2018118990A1
Application number: PCT/US2017/067419
Authority: WO
Inventors: Vincent Paul IANNAZZO
Original assignee: Iannazzo Vincent Paul
Priority date: 2016-12-19
Filing date: 2017-12-19
Publication date: 2018-06-28

Abstract

A business method and related digital portal work to create an observable, verifiable and tangible result that can prevent the default of financial transactions by creating a separate income generating Private Equity Portfolio Asset Base that can be financially relied upon prior to a financial default. The self-insured, income generating Private Equity Portfolio is created contemporaneously by the select equity creator plus (SECP) at the time of the underlying transaction's closing, providing contemporaneous liquidity upon the execution of the underlying transaction. Once the underlying transaction is secured, the additional value created by the SECP, vis-à-vis the Private Equity Portfolio, may be used for other financial purposes unrelated to the original underlying transaction. The user of the SECP has a direct and additional financial benefit from the Private Equity Portfolio Asset Base in tandem with the counterparty to the financial transaction.

Description

DIGITAL PLATFORM FOR CREATING INSTANTANEOUS INCOME GENERATING PRIVATE EQUITY PORTFOLIOS WHOSE VALUE CAN BE CONTROLLED AND EXCEED THE VALUE OF THE UNDERLYING INVESTMENT INSTANTANEOUSLY

BACKGROUND OF THE INVENTION

The present invention relates to financial methods and platform for performing the same, and more particularly, to a digital platform for creating instantaneous income generating private equity portfolios whose value can be controlled and exceed the value of the underlying investment instantaneously.

Traditional Cross Collateralization does not provide the flexibility needed in a volatile economic environment and, as a result, it may be restrained or deficient from preventing a default.

Synthetic Derivatives, Letters of Credit, Bank Guarantees and

Traditional Self-Insurance Mechanisms do not provide financial flexibility. All of the mentioned do not create any income generating private equity portfolios at the time of closing the transaction.

As can be seen, there is a need for a digital platform for creating a private equity portfolio, using debt or equity, that can generate income at the time of a transaction's closing.

BRIEF DESCRIPTION OF THE DRAWINGS

Figure 1 is a schematic representation illustrating core functional components of a system constructed in accordance with exemplary embodiments of the present invention; Figure 2 is a flow diagram that represents the operational steps employed by a system and method according to an exemplary embodiment of the present invention;

Figure 3 is a schematic representation illustrating a self-insurance component derived from a master irrevocable trust and further illustrating a method for adding value to the master irrevocable trust during the course of its lifetime;

Figure 4 is a process flow diagram illustrating the operational steps employed by an exemplary embodiment of the present invention;

Figure 5 illustrates a typical workflow for the portal of the present invention;

Figures 6 through 8 illustrate user interface examples provided by the portal according to exemplary embodiments of the present invention;

Figure 9 illustrates a component model diagram for the portal of the present invention;

Figure 10 illustrates a load balancing cluster scheme usable with the portal of the present invention;

Figure 1 1 illustrates a basic deployment model for the portal of the present invention; and

Figure 12 illustrates an extended deployment model for the portal of the present invention.

DETAILED DESCRIPTION OF THE INVENTION

The following detailed description is of the best currently contemplated modes of carrying out exemplary embodiments of the invention. The description is not to be taken in a limiting sense, but is made merely for the purpose of illustrating the general principles of the invention, since the scope of the invention is best defined by the appended claims. Broadly, an embodiment of the present invention provides a business method and digital platform that work to create an observable, verifiable and tangible result that can prevent the default of financial transactions by creating a separate income generating Private Equity Portfolio Asset Base that can be financially relied upon prior to a financial default. The self-insured, income generating Private Equity Portfolio is created contemporaneously by the select equity creator plus (SECP) at the time of the underlying transaction's closing, providing contemporaneous liquidity upon the execution of the underlying transaction. Once the underlying transaction is secured, the additional value created by SECP, vis-a-vis the Private Equity Portfolio, may be used for other financial purposes unrelated to the original underlying transaction. What is important to note is that the user of SECP has a direct and additional financial benefit from the Private Equity Portfolio Asset Base in tandem with the counterparty to the financial transaction at the time of execution. Additionally, subsequent to the satisfaction and or completion of the underlying transaction, the SECP user still retains the financial benefits of the Private Equity Portfolio.

The business method / SECP of the present invention can prevent a financial default by drawing upon a newly created asset base in a time determinate irrevocable trust or by way of the Irrevocable Sub-Trust that provides the Self- Insured Component of the Invention. Embodiments of the present invention can be utilized in the real estate industry, by central banks, sustainable and renewable energy projects, university research projects, medical research projects, humanitarian projects, animal rights projects, infrastructure development projects, government projects, non-government projects, mining and extraction projects, agricultural projects, water projects, corporate acquisitions, blockchain amplification and the like. Aspects of the present invention can be used for non- economic transactions, including, for example, the purchase of non-income producing asset classes such as non-performing debt, art collections, grant creation and philanthropic endeavors.

According to embodiments of the present invention, a digital portal is created that permits a user to create a private equity portfolio to support an underlying financial obligation.

Referring to Figure 1 , functional components of an exemplary system developed in accordance with embodiments of the present invention are shown.

System 10 includes a data storage device or database 12, a control program 14 which is operable to integrate the components of the system 10, and a data processor 16. A data input device 18 can be used to provide input into the system

10. The data input device 18 can include a keyboard, mouse, touchscreen, voice recognition, and the like. A data output device 20 can be used to allow a user to view data from the system 10. The data output device 20 can be a video monitor, an audio output, or the like. While the components are indicated in a single box in Figure 1 , it should be understood that such components can include one or more of any of the components. For example, the database 12 can include multiple database sources.

Further, it should be understood that one or more of the components of the system 10 may have multiple uses. For example, the data input device 18 may be combined with the data output device 20. Also, one or more of the components may be hosted, such as via cloud computing on a mainframe computing system.

Accordingly, the system 10 may be integrated with other systems, such as a program maintained by an outside software company, such as Bloomberg

Services, for example.

Those skilled in the art will readily ascertain that a system in accordance with some embodiments of the present invention may include various computer and network related software and hardware, specifically, programs, operating systems, memory storage devices, data input and output devices, computer processors, servers with links to data communication systems, wireless or wired, such as those that form a local or wide area network, such as Bloomberg Monitoring and Subscription Service.

Those skilled in the art will further appreciate that specific types of communication networks and devices, software and hardware are not vital to the full implementation of various embodiments described herein or other embodiments within the scope of the present invention.

Further, it should be understood that the type of communication network, devices, software and hardware may also vary predicated upon rapid advances in technology that are ongoing in the financial data community. Therefore, the precise software and hardware configuration of the various embodiments may be permutations of the embodiments of the present invention while still remaining within the scope, purview and spirit of the present invention.

Referring now to Figures 2 and 3, the term IRT refers to an irrevocable trust, MT refers to a master trust, and LTIC refers to a long term investment contract. In step 22, debt and/or equity is secured. In step 24, an irrevocable trust (IRT) can be formed. In some embodiments, a tax efficient jurisdiction may be chosen for the formation of the IRT. In step 26, the investment vehicle is chosen, as better described below. In step 28, the investment candidate can be analyzed with the system 10 described above and, as shown in step 30, if the candidate investment does not meet predetermined criteria, the step 26 and 28 are repeated until such a suitable candidate investment is found. In step 32, upon completion of the selection of the investment vehicle, a long term investment contract (LTIC) can be configured to vest into the IRT. In step 34, the LTIC can be adjusted to be congruent in time to the IRT. In step 36, the net present value can be computed utilizing software of the system of the present invention. In step 38, the value derived from step 36 gives rise to a newly created equity component. In should be understood that the net present value can be calculated using various types of software, such as Microsoft Excel Software. The software can utilize the discount rate and a series of future payments (negative values) and income (positive values). An explanation of calculating net present value is given below, by means of example. First, one calculates the investment's discount rate and the cash flows it will return each year. The discount rate represents the annual return one could earn on a similar investment with similar risk. For demonstration, assume a business is considering investing in new programing software that will generate cash flows of $1 ,200, $1 , 100, and $1 ,000 in the first through third years, respectively. For this explanation, the discount rate will be 8%. Each cash flow, the year they will be achieved, and the discount rate as a decimal are entered into the following formula: cash flow / [(1 + discount rate)^Ayear]. A different formula can be used for each cash flow. In this example, the formulas are $1 ,200 / [(1 + 0.08)^Λ1 ], $1 , 100 / [(1 + 0.08)^Λ2] and $1 ,000 / [(1 + 0.08)^Λ3] for the first through third years, accordingly. The numbers in parentheses of the first formula are added and raised to the power of the exponent. The numerator is then divided by that result to calculate the present value of the first year's cash flow. Then, the formula for each additional year's cash flow can be calculated. In this demonstration, one would add 1 to 0.08 to get 1 .08 and raise this value (1.08) by the first power to get 1.08. The numerator ($1 ,200) is divided by 1 .08 to get a present value of the first year's cash flow of $1 , 1 1 1 . The other two formulas can be calculated to get present values of $943 and $794 for the second and third year's cash flows, accordingly.

Next, the present value of each cash flow is added to get the entire present value of the investment cash flows. In this demonstration, $1 , 1 1 1 , $943 and $794 are added for a present value of $2,848. Finally, the up-front cost are subtracted from the entire present value of its cash flows to calculate its net present value. In closing the demonstration, one can assume the up-front cost is $500. Thus, by subtracting $500 from $2,848, one obtains a NPV of $2,348. The foregoing substantiates that you can expect the investment will generate a profit of $2,348.

Referring to Figure 3, in step 40, trust units can be carved out and used to acquire a new LTIC from the IRT / MT. In step 42, the LTIC can be analyzed with the system of the present invention. In step 44, a new investment can be secured with the LTIC and, in step 46, the LTIC can be vested into a new Irrevocable Sub-Trust (IRST). The software of the system 10, described above, can be used to calculate a net present value of the new IRST in step 48. In step 50, the net present value of the IRST can be used to add value to the master trust. In step 52, the new IRST net present value can be added to the master trust to compensate for less than projected returns. In step 54, the lifetime of the IMT, along with the LTIC, can be increased to increase the net present value. In step 56, a multiple trust structure can be used to augment the master trust value.

The financial structure creates private equities that are separate from the underlying financial transaction. The equities support the financial transaction since they are a separate asset class within the structure of the SECP. This directly creates concrete, useful and tangible benefits to all of the parties to the financial transaction.

Since the Net Present Value (NPV) of income generating equities created in a Time Determinate Irrevocable Trust is separate from the underlying transaction, they have significantly more value than the underlying transaction. Therefore, the asset(s) acquired in the underlying transaction do not have to revert back to the seller or funding financial institution through foreclosure because of the added created value vested in the private equity portfolio can be relied upon by the financial institution funding the transaction or seller of the asset(s).

Furthermore, in the event of an anticipated default of the underlying transaction, the separate equity portfolio vested in the Time Determinate Irrevocable Trust, can be utilized to satisfy the debt vis-a-vis the hypothecation or sale of the Trust Assets. Accordingly, the financial burden upon the underwriting entity or guarantor of the underlying financial transaction is made whole. To illustrate: the underlying transaction value is X. The value of the Time Determinate Irrevocable Trust is 3X. Both the former and latter values are created at the time of the closing of the financial transaction using the prescribed business method / SECP.

Referring now to Figure 4, for illustrative purposes and convenience, the process steps will be described in conjunction with the exemplary system as shown in Figure 1 . A first step 60 is to select the property to initiate the implementation of the system and methods of the present invention. The system of the present invention can compute a down payment (step 62) that will satisfy the requirements of the methods of the present invention. The system can account for several variables, including income stream of the subject property, tenant base, appraisal value, and necessary equity component required by a lending institution.

The down payment can be vested into the methods / financial structure of the present invention in step 64. In steps 66 through 70, the system can create an irrevocable master trust and sub-trust as described above. A portion of the trust units can be sold in step 72 for a the down payment on the property and the underlying debt (mortgage) on the property can close in step 74.

To perfect the Irrevocable Master Trust and related Irrevocable Sub- Trusts in step 176 through the processes of Figures 1 through 3, described above. Sale or hypothecation of trust units, in step 178 can be performed to supplant collateralization of the underlying real estate transaction. In step 180, debt satisfaction may be achieved by way of hypothecating and/or selling a portion of the Private Equities (trust units) created by the methods of the present invention.

Once the debt is satisfied, in step 82, the private equity created by the system and methods of the present invention are available for additional acquisitions. Step 84 described how this private equity that is created is unencumbered.

The business method / SECP of the present invention can be deployed with either debt or equity components (hereinafter referred to as the "Vector"). The Vector is placed into an Irrevocable Trust for a determinate time interval. The Vector funds are typically invested into a "highly creditworthy" investment vehicle that has proven and demonstrable historical returns on investment (ROI). Various investment vehicles may be used for the Vector.

The Vector funds are allowed to compound in the Time Determinate Irrevocable Trust over its lifetime. Therefore, based upon the projected returns of the highly "creditworthy" investment vehicle and the determinate lifetime of the Irrevocable Trust, one can calculate the Net Present Value (NPV) of the Trust. The NPV will be significantly more valuable than the Vector's Value. It is important to note that value in the Time Determinate Irrevocable Trust is created contemporaneously at the time of the closing of the underlying financial transaction. The net effect of utilizing the Business Method / SECP is transformative to the Vector Component since its value is increased significantly at closing of the financial transaction.

In the Time Determinate Irrevocable Trust, the debt or equity used to purchase the highly "creditworthy" investment vehicle(s) has proven and demonstrable historical returns. The selected investment vehicle(s) must have a positive return on investment in various economic conditions. The selection should be centered upon consistency of average annual returns for a period of not less than 7 years. Additionally, there should be a contractual agreement between the provider of the "creditworthy" investment vehicle and the trustee of the Time Determinate Irrevocable Trust. The agreement should be congruous in duration to the lifetime of the Irrevocable Trust. Additionally, the investment vehicle(s) should have sufficient averaged annual returns to generate a NPV over the lifetime of the Time Determinate Irrevocable Trust that will exceed the value of the Vector Component at closing of the financial transaction.

Alpha is a measure of the average return of an investment as compared to a benchmark, such as the S&P 500. Alpha is a risk-adjusted measure of the active return on an investment. Therefore, a strong and consistent alpha is a desired attribute of an investment. Beta is a measurement of volatility of an investment. The beta is compared to a benchmark, such as the S&P 500. In essence, one can characterize the beta as the tendency of an investment to respond to swings in the market. The less the propensity of an investment to swing under various economic conditions, the more secure and the more "credit worthy" the investment.

R-squared (R²) is a necessary statistic to factor into the equation when selecting the investment vehicle in the process of the present invention, as described above. R-squared reflects the percentage of a fund's movement that is explained by the movement in the benchmark index. Of course, if the selected investment vehicle consistently surpasses its benchmark, this investment would meet the criteria selection process as described above with respect to Figure 2.

Additionally, asset stress test software, such as Alternativesoft, should be utilized to determine, firsthand, whether the investment selection will perform well under various market conditions. This software will take into account the alpha, beta and R-squared characteristics of the investment vehicle. This software, or similar products, can be used to provide the asset stress return with probabilities of future returns notwithstanding previous performance as a sole basis for future asset performance.

To satisfy the need for asset divisibility in the Time Determinate

Irrevocable Trust, the investment vehicle(s) contracts should be vested in the name of a Special Purpose Vehicle (SPV). The SPV can be a LLC with Membership Units, a Corporation with Shares or the Corpus of the Time Determinate Trust can create "Trust Units". The foregoing provides the user of SECP the liquidity that is needed to prevent a default without the entire liquidation of the assets held by the Trust. In essence, it allows the user of SECP to "carve out" a portion of the assets held by the Trust.

Optionally, to further enhance the NPV of the Irrevocable Trust, the present invention can utilize an Irrevocable Sub-Trust (1ST) to augment the already "creditworthy" historically proven investment vehicle(s). The 1ST can be drawn upon to compensate for less than average or negative annual returns. Additionally, the 1ST serves as the Self-Insured Component (SIC) of the Invention. The SIC can be configured contemporaneously at the time of the closing of the underlying transaction. Accordingly, this provides "instant" coverage against the default of the underlying transaction.

The components of the business method / SECP can be procured in a different time sequence to suit the needs of the user. For example, the selected income generating investment vehicle(s) may be chosen prior to the procurement of the Vector component. However, for the useful value of the business method / SECP to be realized, the components of SECP must be used in the prescribed sequence as depicted in the flow chart and contained herein.

The most significant exception to the above is the potential for element reconfiguration of the Time Determinate Irrevocable Trust. By increasing the Lifetime of the Trust in conjunction with the Long Term Investment Contracts (LTIC), the user of the business method / SECP also increases the NPV of the Trust. The internal investment vehicle compounding of a Trust that has a five year lifespan will have lesser NPV in comparison to a Trust that has a ten year lifespan.

To implement the methods described above, the present invention includes a digital platform allowing users to access an internet-based platform for utilizing features of the present invention. The typical site usage by a registered user (PU) seller of the trust units can be described by the following sequence of events:

a. PU will verify their account balance;

b. PU will select the amount of trust units they want to sell;

c. PU will request from the automated site system to segregate the amount of trust units they desire to sell;

d. PU will place the selected trust units and or private equity portfolio on an automated auction site along with a full description of the trust units and or private equity portfolio. Such description will include the AST results, LTIC analysis and full description along with the historical performance of the underlying financial products that comprise the private equity portfolio and trust units. The full background of the provider of the financial product will also be disclosed;

e. PU will designate an asking price for the selected trust units and or private equity portfolios in conjunction with the full description of the same;

f. PU may offer a discount to the value of the trust units or the PU may not. For example, a seasoned and well documented private equity portfolio that demonstrates proven historical returns that gives the potential buyer to extend the life of the IMT in tandem with the LTIC and the underlying financial products of the same will command a value that may exceed is market value. Alternatively, a newly created private equity portfolio may require a discount in order to sell on the auction site. Moreover, in the latter example, the underlying financial products (FP) that comprise the LTIC, may be from a highly successful producer of revenue streams. In this instance, the portfolio may command a premium over market value. Without the proven historical revenue stream, even though the FP has passed the creditworthiness of the AST against the protocol of the invention, the private equity portfolio may require a discount for a successful auction sale. The foregoing relates to the "perception of value" of the subject private equity portfolio; g. The posted trust units of the Subscriber/PU, will have the option to raise or lower the price of the private equity portfolio during the course of the auction process;

h. Once the sale is consummated, the trust units will be transferred to the buyers account and the seller will receive the proceeds of the sale. The tax liability, if any, will be borne by each respective party to the transaction;

i. The Auto-create (AC) function will align the features of the site to create the newly formed private equity portfolios of the invention. It will create a step-by-step template that, when completed, will give rise to the newly created private equity asset class. The AC function will include trust template structures and all related functions required to create the private equity product known as EQ Plus.

A Typical PU transaction is described below:

a. The sequence of a typical PU transaction can be utilized by most financial transactions that warrant the cost of the execution of the business method/invention. For the illustrated example, the underlying transaction is a real estate acquisition. First, the property for acquisition is identified. The needed down payment (DP) will be calculated by the site. This calculation will take into account the parameters of the lender, the property income if any, property appraisal, the terms of the loan, and any other particulars that are required to effectuate the transaction. The calculated DP will then be placed into the structured business method. The PU will then utilize the DP to purchase the AST financial products that meet the criteria of the invention's protocol that will comprise the LTIC. Accordingly, the FP that are vested into the LTIC which is placed into the IMT give rises to the capitalization of the private equity created by the invention;

b. The LTIC, as noted, will be placed into the IMT for a specific time. Based upon the lifetime of the newly created IMT, the proven creditworthiness of the FP that meet the AST and the protocol of the invention, the congruent LTIC that controls the relationship between the FP provider and PU gives rise to the calculated Net Present Value of the newly created private equity portfolio. Moreover, at any time, the PU may increase the value of the IMT through the deployment of the additional features of the invention. For example, the PU may initiate the use of 1ST or extend the lifetime of the IMT along with the corresponding elements of the LTIC. In essence, this gives the PU complete control over the AST analyzed NPV of the IMT/IST for the lifetime of the same;

c. The certified NPV will be defined by third party Alternative Asset Valuation Software such as provided by Duff and Phelps;

d. During the course of the lifetime of the IMT, the PU may elect to hypothecate a portion the trust units for any particular purpose. The lender may be part of the approved lender database or the Private Trust Bank that will be created by the House Account managed by the Board of Administrators. Every transaction that is consummated by use of the instant invention will create a portfolio of private equities. The private equities may be shared on the 50/50 basis or may not be shared at all. The decision will be left the discretion of the Administrator. The foregoing will be subject to the completion of the financial satisfaction of the underlying transaction.

A commercial transaction will lend itself to the non-sharing of the created private equities created by the subject invention. Alternatively, a non-profit, humanitarian, or other charitable endeavor will lend itself to the sharing of the private equities created by the invention. Moreover, the commercial PU will have the option to hypothecate the "paid for" or satisfied underlying asset and hypothecate the same to create a private equity portfolio. The governing document of all the transactions will be established by the license granted to each PU. The license will place clear limits on the private equities that can be created by the invention. In the event that the PU private equity portfolios exceed the parameters defined by the license, the additional private equities/trust units will be automatically credited to the House Account;

e. In the instant example, the newly created private equity portfolio will be utilized contemporaneously to satisfy the underlying transaction at closing by way of the arrangement of the hypothecation of the private equities created by the invention on the day of the closing of the transaction. Also, the newly created private equities may be sold on the same day or shortly thereafter to satisfy the underlying transaction;

f. The hypothecation and or sale of the new private equity asset class will be reflected upon the account of the PU. The Alternative Asset will be treated as a "margined" asset in the event that the PU elects to hypothecate the private equity portfolio at closing. At closing, by way of use of the invention, the trust unit value will exceed the underlying cost of the total real estate acquisition.

The portal can have several functions, including the following:

a. AST;

b. Valuation Services and Alternative Asset Valuation Software;

c. Trust Templates for IMT and 1ST;

d. Third Party Interface Capability (Inovia, Duff and Phelps);

e. Calculation Functions;

f. Depository Tracking and related functions;

g. Notification Functions set by PU for communication mode;

h. Automated Account controls;

i. Auction Functions for sale of trust units;

j. Auto-create Function to serve as a comprehensive template to gather all of the components of the invention that will expedite the portal site's functions into one cohesive undertaking to establish the initial private equity portfolio;

k. Multi-language Functions;

I. Multi-currency functions; m. Notification Functions set by PU for financial matters such as portfolio values, new FP notifications, Third Party notifications, AST notifications, Predictive Software notifications;

n. Private Trust Bank Functions designed to complement the Depository Trusts. Total account balances, outstanding loans that relate to the PU and third party lenders;

o. Encrypted Video Conferencing;

p. Encrypted Site Functions, inclusive of email; and

q. Retina, Email and Encrypted Trust Unit Verification Protocols.

The above enumerations compliment and augment the already noted features of the portal site previously provided.

The beneficiary of the IMT could be a natural person, grantor of the trust, another trust, a corporate entity, a NGO, Charity, or any other legal entity. The trustee can be appointed by the grantor of the trust and can be either their own designated appointee (lawyer, solicitor, bank, or any designated entity appointed by the grantor of the IMT/IST.

The owner of the underlying asset does not have to be a subscriber of the portal site. However, they do need to be identified to the site to make certain that the selling party is compliant with International Law and other potential compliance related matters. If the seller is a corporate entity, the principals of the business entity must identify the principals. The exercise is important to prevent asset or money laundering.

The FP database of any qualified seller of such. The qualified seller and or broker must be registered and approved by the Administrator of the portal site. Security features, such as biometrics, may be used to validate qualified sellers and or brokers or PU. Such examples would include Governments, Investment Banks, Pension Funds, Private Hedge Funds, Corporate FP, Pension Fund Debt, Private Partnership Assets, Real Estate Owners, Trusts, and the like. Of note, the portal site will not derive any income from the foregoing database use. It will not act as a broker in any way, shape or form. It will merely provide a compilation service for the PU. The Administrator or the portal site will not make any recommendations to the PU. The only qualification relates to the applicability and adherence to the invention's protocol.

All transactions are internet-centric. Therefore, all parties to the transaction will either have a PU status or known to the Administrator. All PU and related site verified users, will have access to an encrypted video conference function of the site. This will be elected for use by the parties to the transaction and not a site requirement.

Similar to eBay or any similar service, the PU will have the ability to relist the private equity portfolio/trust units. This will be in addition to change the price point and the term of the auction by the PU.

The only time, at the election of the PU, that mediators can be utilized by the PU is for legal advice for trust formation and valuation services. Of note, the foregoing services will be automated for complete digitization of all site functions.

The details of the trust units will be known to other subscribers. A filter function will be optional to the seller of the trust units so that qualified buyers will only have access to those particulars. The seller may elect to have private bidding to further enhance the filter functions. A government selling a private equity portfolio will only want those subscribers financially qualified to make the purchase.

First and foremost, the subject created private equity portfolio is superior to products such as Credit Default Swaps and the like. It is investment grade, income generating, asset based and offers the element of control that other derivative products and business methods do not have. The invention's created product grants a degree of certainty that others do not possess. In the juxtaposed example, a CDS portfolio is not backed by assets more than 80% of the time, and is used as collateral by many financial institutions. As a result, the 2008 Global Financial Meltdown was created by such ubiquitous use of the same by the financial community. In the case of the methods and portal of the present invention, because of the characteristics and features of the subject invention, such a debacle will be avoided.

The NPV is taken into account as a direct result of the investment grade income generating assets that are "locked" into place to create certainty by way of the IMT in tandem with a LTIC that is congruous to the defined lifetime of the IMT. The subject invention's product calculates the NPV of the enforced compounding of the investment grade LTIC vested into the IMT gives rise to it's capitalization. Even with the discount to cash flow, the NPV exceeds the value of the underlying transaction.

The invention creates a "ready-made" business with strong and demonstrable cash flows. The difference between a conventional business model and the instant invention is centered upon the element of control, investment grade income producing assets, and the enforcement of the creditworthiness that "locks" the value of the LTIC. In comparison, a conventional business is fraught with uncertainties. Point in case, the latter is besieged by the lack of "locked" in sales performance, the uncertainty of markets, the uncertainty of management, and the like. Despite the foregoing, businesses often trade at multiples of annual sales when they are bought and sold. It is not uncommon for businesses to trade at 10, 15 or more than 20 times annual earnings. In essence, the business, despite its uncertainties, is valued using an established core financial methodology, its Net Present Value. True, goodwill and other fixed assets are calculated into the ultimate value. However, the core tool for the businesses valuation is centered upon it's NPV. Lending institutions will lend upon the preceding scenario time and time again. In essence, the invention creates a "new business" without the uncertainties of a conventional business. In addition to the above argument, the global community in which everyone shares needs something that can give us global financial stability. At the moment, we do not have such a product or institution that can bestow such benefits. We need something "new". A new financial asset class that utilizes sound financial principles in a novel way which utilizes the integral digital platform to create a sustainable financial product that can be utilized by industries, governments and entrepreneurial endeavors. This is called an "invention". An invention that will help grow the middle class for governments and bring stability to our teetering global economy and even assist with the stability of the existing financial status-quo by buying their superior investment grade products.

Finally, the Net Asset Value is the value of an entities assets without the value of its liabilities and does not follow the protocol of the structured business method/invention. NAV is a traditional financial tool utilized in a traditional manner and its use does not give rise to a new asset class, as does the instant invention.

The advantages that a subscriber has by buying an established private equity portfolio is many fold. The buyer does not have to go through the creative process to develop a new private equity portfolio, the existing portfolio has a demonstrable historical return, the FP that comprise of the LTIC may no longer be available, a potential discount that may not be available for a similar performing private equity portfolio, and a defined historical analysis pursuant to the AST. The benefits may be further promulgated by drawing a comparison between a fee simple real estate asset that is already developed and generating income as opposed to new ground up construction.

Business Intelligence will play a key role in the elements of the predictive software that the portal site must utilize. Accordingly, all historical, current, and predictive aspects of all business operations of the FP providers must be taken into our analytical calculations. The relationship of online analytical processing, data mining, complex event analysis and processing, management performance and analysis, baseline performance establishment and analysis, text mining, and prescriptive analytics. Related functions that can be utilized are: spreadsheet analysis, repeating and querying software, digital interface dashboards, data warehousing to analyze established patterns, decision engineering, and all relevant information systems that relates to the PU portfolio's composition. Providers of such related software are Microsoft, Tableau Software, Targit, Kognito, Oracle, Logi Analytics, and the like.

It should be understood, of course, that the foregoing relates to exemplary embodiments of the invention and that modifications may be made without departing from the spirit and scope of the invention as set forth in the following claims.

Claims

What is claimed is:

1 . A digital portal that permits a user to create a private equity portfolio to support an underlying financial obligation, the digital portal comprising:

a first module that computationally analyzes one or more investment candidates to determine one or more suitable investments by computing a net present value of the one or more suitable investments and at least performing a computerized asset stress test to determine an asset stress return;

a second module that computes an initial payment that is invested in the one or more investment candidates and that is sufficient to provide a trust value greater than the financial transaction and that creates contemporaneous liquidity upon execution of the financial transaction by vesting the one or more suitable investments into an irrevocable master trust that secures the financial transaction, wherein

the net present value of the one or more suitable investments created in the irrevocable master trust are separate from the financial transaction; and

the trust value is available for other financial purposes unrelated to the financial transaction.

2. The platform of claim 1 , further comprising a third module that acquires a new long term investment contract by carving out trust units and vesting the new long term investment contract into an irrevocable sub-trust.

3. The portal of claim 2, wherein the third module computationally analyzes a new set of one or more investment candidates to determine one or more suitable investments for the new long term investment contract.

4. The portal of claim 2, further comprising a fourth module that computes a sub-trust net present value of the irrevocable sub-trust.

5. The portal of claim 1 , wherein the digital portal is an internet-based portal.

6. The portal of claim 1 , further comprising a third module that permits a user to offer one or more investment candidates for auction on an auction portion of the portal.

7. A internet-based digital platform allowing a registered user seller of trust units to create a private equity portfolio to support an underlying financial obligation, wherein the platform performs the following steps:

verification of an account balance by the registered user seller;

selection of an amount of the trust units desired to be sold to support the underlying financial obligation;

segregation of the amount of the trust units desired to be sold;

placement of the selected trust units on an automated auction site along with a full description of the trust units

designation, by the registered user seller, of an asking price for the selected trust units;

transference of the trust units to an account of a buyer at the automated auction site, once a sale is consummated; and

transference of proceeds of the sale to the registered user seller to support the underlying financial obligation.

8. The internet-based digital platform of claim 7, wherein the platform includes an auto-create function to create newly formed private equity portfolios and a newly created private equity asset class.

9. The internet-based digital platform of claim 8, wherein the auto-create function includes trust template structures.

10. The internet-based digital platform of claim 7, wherein the full description of the selected trust units includes asset stress test results, long term investment contract analysis and an historical performance of underlying financial products that comprise the trust units.

1 1. The internet-based digital platform of claim 7, wherein the platform further provides a full background of a provider of the underlying financial products.

12. The internet-based digital platform of claim 7, wherein the platform further includes offering an option for the registered user seller to offer a discount to the value of the trust units.

13. The internet-based digital platform of claim 7, wherein the platform permits the registered user seller an option to raise or lower the asking price of the trust units during an auction process.

14. A system for preventing default of a financial transaction comprising: a data storage device;

a control program accessible via an internet-based digital platform; and a data processor, wherein

the control program includes software configured for

computationally analyzing one or more investment candidates to determine one or more suitable investments;

computing a net present value of the one or more suitable investments by at least performing a computerized asset stress test determining an asset stress return;

computing an initial payment that is invested in the one or more investment candidates and that is sufficient to provide a trust value greater than the financial transaction;

creating contemporaneous liquidity upon execution of the financial transaction by vesting the one or more suitable investments into an irrevocable master trust that supports the financial transaction; and

paying the initial payment with a portion of trust units from the irrevocable master trust, wherein

the net present value of the one or more suitable investments created in the irrevocable master trust are separate from the financial transaction and have a trust value greater than the financial transaction;

the trust value is available for other financial purposes unrelated to the financial transaction; and

the internet-based digital portal provides an auction site for selling at least a portion of the one or more suitable investments.

15. The system of claim 14, wherein the data storage device is hosted via cloud computing on a mainframe computing system.

16. The system of claim 14, wherein the software carves out trust units to acquire a new long term investment contract and vests the new long term investment contract into an irrevocable sub-trust.