A pension plan for Wall Street?
By BOB LEEBMAN EditorA pension plan that would allow investors to buy the assets of companies and other companies that have been on Wall Street for decades is in the works.
The fund would be backed by a combination of debt and equity, and it would offer investors an option to buy that investment at a discount if they had an outstanding balance.
In an effort to cut down on the cost of buying an asset, it could offer a discount that ranges from 10 percent to 40 percent, according to a person familiar with the matter.
The person, who asked not to be identified because the discussion is private, said the plan is still being developed, and no final decision has been made.
An initial public offering would occur by 2019.
At the same time, the plan would allow the company to sell assets at a discounted price to investors, who could then buy the company at a higher price if they wanted.
Such an offer would be a way for a firm to pay off debt, the person said.
There is no specific limit on how much a firm can pay off, but companies that are struggling could find it difficult to pay it off if they want to remain profitable, the source said.
A firm could be able to pay less if its debt has already been paid off.
Investors who buy the pension plan would not own shares in the firm that has invested its money, but the plan could be managed by the firm, which would buy a percentage of the investments.
While the idea of a pension plan is a novel one, it is not the only way for Wall St. to get the cash flow it needs.
Many Wall Street firms are under pressure to sell their assets as they are running out of cash, and the government is also cutting back on corporate tax breaks and other tax breaks to lure more companies to the area.
Even if a firm sells its assets, the firm could still take money from the fund for debt repayment and pay it back over time.
To date, the funds biggest investment is $100 billion in a bond fund run by a fund that has been managed by a private equity firm.
If the pension fund were to be launched, there would be other companies in the sector that would benefit from a more flexible way to invest in companies that may be in financial trouble, said Richard Tarrant, chief investment officer at BlackRock.
It is not yet clear if there is an appetite for a similar plan in the U.S. What makes this different is that it would not be tied to a specific firm, but to the industry at large, Mr. Tarrants said.
That could allow the fund to be sold to other investors, like hedge funds and pension funds, which could be a better alternative to Wall Street, he said.
“The idea is that you would not have to worry about any company being able to go bankrupt,” Mr. Trump said in an interview with ABC News.
“You would not need to worry that your 401(k) would go belly up.”
The company that manages the fund said it is working with Wall Street to find a company to take over the management of the fund.