IFT - Imperial Holdings

[NoCalledStrikes]

Imperial Holdings announced a rights offering today.  Imperial provides structured settlements to people seeking early payments from life insurance contracts. My attraction to the business is the presence of Philip Goldstein, CEO of Bulldog Investors.

 

In the announcement the company states that Bulldog Investors, LLC, an affiliate of certain of its directors and its largest shareholder, intends to subscribe for at least $10,000,000 of shares or about 1/3 of the offering.

 

Market Value = 132 MM. Book Value = 9.86, Current price about $6.10 and the rights offering is for 5.75.  Currently, the company is dependent on high cost capital (>10%) and so it appears the capital raised could be quickly put to use.

 

Risks are the ability to get future business at high discounts due to increased competition, present value of future policies declines with rise in interest rates, legal issues surrounding the reselling of life insurance policies, small size of the company, and the sins of prior management.

 

I am looking for reasons to stay away, your feedback welcome.

 

 

[cobafdek]

At first glance, this is my kind of investment.  I'd love to buy something at about 40% discount from BV.

 

Risks are the ability to get future business at high discounts due to increased competition, present value of future policies declines with rise in interest rates, legal issues surrounding the reselling of life insurance policies, small size of the company, and the sins of prior management.

 

What would hold me back, in addition to these risks you've listed, is the reliability of the company's fair value measurements.  I'm not sure how confident I could get with all the assumptions that go into calculating NAV.  Much of the asset side (value of the life settlements) is based on an industry-standard Valuation Basic Table, and according to their footnotes, they also employ "life expectancy providers" to examine the medical records, and end up with a "blended" figure.  On the liability side, value of the debt depends, among other things, assumptions about discount rates.  Small changes in assumptions may lead to big swings in value.  For instance, I saw a table in their footnotes in which the values of the life settlement portfolio vary 15-20% up or down with changes of life expectancy of 6 months.

 

I'm no life insurance valuation expert, and these methods may be industry standard.  Do you (does anyone?) have a handle on how reliable these estimates are?

[Agg78]

Fairly positive news out today on announcement of a new credit facility that looks like it will improve cost of funds and liquidity.

http://ir.imperial.com/releasedetail.cfm?ReleaseID=922497

 

This is coming on the back of a successful rights offering which was oversubscribed including by Bulldog investors, which should signify a vote of confidence. Traded quite weakly afterwards, even below the rights offering price.

 

I agree valuation of these long dated cashflows and liabilities is murky. In such cases as with a lot of financials comes down to whether you trust management, Goldstein's involvement here looks like a positive.

[NoCalledStrikes]

I suggest listening to the May AGM web presentation on their IR page, http://www.videonewswire.com/event.asp?id=102206.  I was impressed with how management is delivering on their strategy. They used the high cost debt to buy new shorter maturities which changed the future cash flow into a more evenly balanced portfolio and are now paying off the high cost money in today's announcement.  They raised capital in a share holder friendly manner and they management put up the bucks to insure an over subscription.

 

Your questions about the assumptions are all legitimate. The best I can offer is that clearly Goldstein is in for the long haul - his holdings are too large for him to exit easily, and he does not strike me as someone who would throw good money after bad, so his comfort is my comfort.

 

The AGM webcast also raises the issue of high expenses.  They will be lower without the Sunlife lawsuit, but there is still too much spending going on.  Management is well aware of this, but if this trend doesn't end, all the excess cash will go to lawyers and consultants and not to us shareholders.

 

[Osier]

Have a look at how much cash Bulldog has made by issuing loans to Imperial at a discount to par, which are then repaid after a couple of quarters at a surplus to par.

 

While Imperial's maturities on life insurance policies are clearly starting to ramp up in recent quarters, the question is how much of this cash will ultimately come to common shareholders after Andrew Beal and Bulldog have taken their share.

 

I am a reluctant owner here.

[BG2008]

Looked at this name a few years ago at the high $3 range.  The thing that I couldn't get over is why in the world should the discount rate by double digits.  Think for a minute, they are claiming that they are buying policies off from strangers who no longer wish to continue to pay their premium.  These transactions are typically done at a price much higher than all the cumulative premium paid into the policy at that point.  Before adjusting for SG&A expenses for the insurance company, Imperial is using a 10+% discount rate to value NAV. 

 

Let's invert the thought process.  If you are the insurance company, are you in the business of underwriting a policy where you have to earn 10+% in order to break even?  Does that sound like insurance company kind of IRR on their debt and equity portfolios?  Probably not. 

 

So, I called a few people who are top level salesman at NYC insurance companies and we came to the conclusion that the policies are likely NOT "whole life".  If they are whole life policies, this is a no brainer given the portfolio characteristics that they have indicated.  These are likely universal life policies (might've gotten the terms wrong) that have a guaranteed premium payment up till a certain age of the insured, i.e. 80, 85, 90, 95 years.  We don't know this datapoint.  In short, the insurance company is betting that the insured will survive past 85.  If they do, the premium gets upped to 5x the previous amount.  So, IFT shareholders own a "call option on the insured passing away by age 85 (picking a number here)"  If they don't, you're faced with the real dilemma that you have to pony up 5x the previous premium for the 86th year payment and it will likely escalate.  There is a huge difference between the value of a $1mm that you'll get by paying $30k of premium each year until the person passes away.  The longer they live, the lower the IRR, but it always makes sense to pay the premium as long as the premium amount is reasonable.  The later situation is quite complex and you'll likely stop payment once they reach that cutoff age. 

 

The industry has a reputation for over promise and under deliver.  Boone Picken's tried to gift an insurance portfolio with pre-arranged premium payments to OSU.  It turns out "rich people live a lot longer."  They're really caught in a pickle now.  Word on the street is that Imperial's management is average.  They don't have any secret sauce on how they source deals etc.   

 

Too many unknown unkowns here.  Not sure Bulldog's involve is enough to convert me into a believer. 

[Osier]

Life settlement products (the financial instruments on Imperial's book) have been around for decades. In essence, Imperial pays someone say 40 to take over her/his life insurance policy which will eventually pay out say 100 when that person dies (=the maturity of the policy). As long as the person lives, however, Imperial has to pay an annual premium to the insurance company. If they fail to pay the premium once, the policy lapses and the investment is lost. Of course, if Imperial had assumed a person would live another 5 years but then suddenly estimates that she/he will live another 10 years, the NPV of that life policy will tank as Imperial will have to pay 5 more years of premiums while the ultimate payout will be discounted by 5 more years.

 

There are several listed companies who have a portfolio of these instruments and as far as I have seen, the underlying life insurance policies only mature at death and do not simply stop at pre-set age as suggested by BG2008. Moreover, if the securities would indeed end at a certain age, this would essentially be some sort of "knock-out" option and Imperial would probably have to amortize part of the value each year (which they don't). 

 

While life settlements were at some point a fad (see the 2005 investment fads by the Reformed Broker http://thereformedbroker.com/2014/12/15/investment-fads-and-themes-1996-2014/) and were sold to private banking clients as a high-yield security, they became highly illiquid during the 2008-09 crisis. Several financial institutions got stuck with them on their balance sheet and all of these had to discount the instruments at the discount rate available in the secondary market. As there were no buyers, the discount rate shot up to around 20%. It has stayed around that level ever since and Imperial only recently started mentioning that the market is becoming a bit more liquid, resulting in slightly lower discount rates.

 

The way to look at these instruments on Imperial's balance sheet is to track the evolution of the maturities and look how this compares to Imperial's own estimates. For example, at the end of 2014 they expected to have 0 maturities within one year (i.e. in 2015), 4 in 2016 (for a total of $9.2m) and 10 in 2017 (for a total of $23.2m). In reality, over 1H15 they had 12 maturities (of which 7 in Q2) for a total of $49.8m.

 

If this trend continues, they seem to be getting closer to the point where they can pay all premiums on ongoing policies from the cash they receive from maturities. As the CEO mentioned in the 2Q15 release, they have secured the debt financing to pay the premiums on the vast majority of their policies. As the maturities increase further, they should over time be able to pay down this debt and finance ongoing premiums from the cash from maturities.

 

Finally, one more thing to keep in mind here is the involvement of Andrew Beal, founder of Beal bank. For those who do not know Beal, he has built his wealth by buying distressed assets through his bank and has a fantastic track record. He was the first to underwrite much the portfolio of Imperial. While the terms of this deal are clearly skewed to Beal's advantage, the loan suggests Beal sees the securities as an credible collateral. Imperial has always said that they intend to pay down this loan over the next 5 years or so as the cash from policy maturities comes in.

 

Ultimately, once all the premiums, debt, legal costs and management salaries have been paid, the cash will flow to shareholders. This will take a couple of years though, mostly depending on one's assessment of Imperial's life expectancy estimates. Another question is how much of those cash flows will be diverted to Bulldog and its affiliate shareholders through further financings (see my previous post on Imperial).

 

On my numbers, there is indeed a material cash upside to ordinary shareholders here but the governance issues temper the size of a position in Imperial. Consider it a reasonably cheap option.

 

[NoCalledStrikes]

FWIW -  Emergent (EMG), the renamed Imperial Holdings (IFT) is currently on sale this week on higher than normal volume. It is selling for $4.95 or $.80 less than the $5.75 rights offering held two months ago.  With a book value of $8.90, the stock price is attractive, but I'd be the first to apply a discount given its legacy issues, the actuary assumptions required to calculate book value and governance. Still, a 20% haircut to BV would  take it down to $7.12 leaving a 44% upside from $4.95 to $7.12.

 

 

 

 

 

 

 

[BG2008]

Life settlement products (the financial instruments on Imperial's book) have been around for decades. In essence, Imperial pays someone say 40 to take over her/his life insurance policy which will eventually pay out say 100 when that person dies (=the maturity of the policy). As long as the person lives, however, Imperial has to pay an annual premium to the insurance company. If they fail to pay the premium once, the policy lapses and the investment is lost. Of course, if Imperial had assumed a person would live another 5 years but then suddenly estimates that she/he will live another 10 years, the NPV of that life policy will tank as Imperial will have to pay 5 more years of premiums while the ultimate payout will be discounted by 5 more years.

 

There are several listed companies who have a portfolio of these instruments and as far as I have seen, the underlying life insurance policies only mature at death and do not simply stop at pre-set age as suggested by BG2008. Moreover, if the securities would indeed end at a certain age, this would essentially be some sort of "knock-out" option and Imperial would probably have to amortize part of the value each year (which they don't). 

 

While life settlements were at some point a fad (see the 2005 investment fads by the Reformed Broker http://thereformedbroker.com/2014/12/15/investment-fads-and-themes-1996-2014/) and were sold to private banking clients as a high-yield security, they became highly illiquid during the 2008-09 crisis. Several financial institutions got stuck with them on their balance sheet and all of these had to discount the instruments at the discount rate available in the secondary market. As there were no buyers, the discount rate shot up to around 20%. It has stayed around that level ever since and Imperial only recently started mentioning that the market is becoming a bit more liquid, resulting in slightly lower discount rates.

 

The way to look at these instruments on Imperial's balance sheet is to track the evolution of the maturities and look how this compares to Imperial's own estimates. For example, at the end of 2014 they expected to have 0 maturities within one year (i.e. in 2015), 4 in 2016 (for a total of $9.2m) and 10 in 2017 (for a total of $23.2m). In reality, over 1H15 they had 12 maturities (of which 7 in Q2) for a total of $49.8m.

 

If this trend continues, they seem to be getting closer to the point where they can pay all premiums on ongoing policies from the cash they receive from maturities. As the CEO mentioned in the 2Q15 release, they have secured the debt financing to pay the premiums on the vast majority of their policies. As the maturities increase further, they should over time be able to pay down this debt and finance ongoing premiums from the cash from maturities.

 

Finally, one more thing to keep in mind here is the involvement of Andrew Beal, founder of Beal bank. For those who do not know Beal, he has built his wealth by buying distressed assets through his bank and has a fantastic track record. He was the first to underwrite much the portfolio of Imperial. While the terms of this deal are clearly skewed to Beal's advantage, the loan suggests Beal sees the securities as an credible collateral. Imperial has always said that they intend to pay down this loan over the next 5 years or so as the cash from policy maturities comes in.

 

Ultimately, once all the premiums, debt, legal costs and management salaries have been paid, the cash will flow to shareholders. This will take a couple of years though, mostly depending on one's assessment of Imperial's life expectancy estimates. Another question is how much of those cash flows will be diverted to Bulldog and its affiliate shareholders through further financings (see my previous post on Imperial).

 

On my numbers, there is indeed a material cash upside to ordinary shareholders here but the governance issues temper the size of a position in Imperial. Consider it a reasonably cheap option.

 

I got into an argument once before with someone about Beal's involvement.  I think there are a million situations where I'll be happy to lend money into an asset but I wouldn't want to own the equity at the price that the equity guys are getting involved in.  The fact that a lender wants to lend is not indicative of how good the equity is.  Examples include aircraft leasing versus Airlines, financing inventories versus owning equity in retail.  So, I think a lender's involvement is only a slight positive, not a positive in the same order of a someone else owning the equity alongside you. 

 

Investing is all about "knowing for sure or 95% confidence interval".  I don't think that imperial is investable unless you have heard it from management team that 100% or 80% of our policy are whole life or are UL that won't lapse until the covered is 95 years old.  Unless you have access to the book or have those stats, you're likely speculating. 

 

BTW, I didn't say that they stop at a certain age.  They up your premmium by 5-10x.  In short, your premium amount is locked in until that certain age.  In short, you have a call option on someone passing away at certain age and then that call premium becomes very very expensive over that certain age. 

 

I agree that you've got some good "tea leaves" but they are not conclusive.  If someone can confirm that 100% of the policies are whole life, I will probably make this a 10+% position for me. 

 

Here's s situation where the recent trend in the portfolio can be misleading.  You have more people passing away than previously thought.  But then the portfolio hits, as an aggregate, say 80 years in the next 2-3 years, and then all a sudden, the premium is now 5-10x of what you paid previously.  It's not so plain and simple then.

 

Either way, I'd love to see how this name play out in the next decade. 

[NoCalledStrikes]

I would think a substantial number of the policies are term life, and I agree that what happens at the end of the fixed rate premium period is definitely material.  it could lead to either hugely increased rates or a forced expiration.  That said, I just have to believe that Emergent must be choosing which policies to buy in part on the provisions of the contracts they are purchasing. This strikes me as life settlements 101, they had better be cognizant of this.  Still, I could see scenarios were they buy a policy with 5 more years on it from a person with cancer who recovers and lives six more years.  My biggest concern is that people who can afford large life insurance policies can often afford very good medical care as well, so these people will likely live longer than expected.

 

Ultimately, I'm counting on the large equity holders (Indaba and Bulldog) wanting to make money on their equity as well as their loans, but yeah I feel less aligned with them in this investment than when I opened my position.

 

[ukvalueinvestment]

The stock price is collapsing and I've got no idea why.  It already looked cheap.  Does anyone have thoughts or theories/ 

[DavidVY]

JGW missed their guidance and discussed worsening conditions for annuity buy-outs (increased competition)

[ukvalueinvestment]

How do we change the name of this thread to Emergent Capital?

 

I listened again to the last Imperial earnings call and the last question piqued my interest.  He asked about COIs and how many Emergent has received and didn't get a totally clear answer.

 

http://insurancenewsnet.com/innarticle/2015/11/16/more-life-carriers-raise-rates-on-older-blocks-of-business.html

http://insurancenewsnet.com/innarticle/2015/11/06/life-carriers-imposing-huge-rate-hikes-on-some-policyholders.html

 

It seems there is an issue with insurers starting to raise their "Costs of Insurance", which is resulting on extremely high increases in premiums payable.  It is legally possible to change your pricing in the insurance industry if the assumptions on which your original pricing was based have not occurred (i.e. interest rates at zero for an extended period of time meaning insurance companies cannot make their estimated investment returns).  So far it is non US owned insurers who are doing this because they have less reputational risk but the fear is that all the insurers start to do it now the rubicon has been crossed.

[TBW]

Anyone still following this?  Been watching from the sidelines for a while.  Has always seem interesting but it was never clear to me if they could easily fund their operations if things didn't go to actuarial models.  Seems like they can fund their estimated premiums for the next year out of their revolving facilities (I think, clarifying with IR).  However it seems that it will be difficult for them to withdraw money.  On call they said expenses will be ~30mil for the year, with 15mil of cash on hand.  Financing for them has become very expensive with secured issuance in Mar at 15% and stock now at the lows.  They do have some receivable of 20mil and can potentially sell some of their contracts but that is only listed at 8mil (likely get down bids for that).  But said on call that roughly 6months worth of cash on hand.

 

Book value is 196mil (they seem to use conservative discount rates of 16.5%), mkt cap of stock is 46mil.  At some point there may be an opportunity here and they are looking at strategic alternatives.  That said the biz is somewhat distasteful for some and there has been plenty of opportunity for a low cost funder to buy them if it was that attractive before now.  The other issue is that most of the PV of the contracts has a maturity of >5yrs with near term FV being 30mil per year (so roughly enough to fund operations).

 

I am far from an expert on this, just find the whole thing interesting.  Anyone have thoughts?  Seems like it's plausible they can sneak by here and then it could be attractive.  But the expected cashflows are just model guesses and are far from assured and funding options are running thin...

[johnheiderscheit]

They had too much good news (Florida Supreme Court decision upholding the business model, dropping of the SEC investigation, Beal Bank restructuring) and the stock price collapsed as a result lol!  I bought some today at 75 cents today but recognize it is a total gamble.

 

From the restructuring announced yesterday and assuming the actuarial model works the bankruptcy risk seems to be off the table.  It probably also means that the deal with Beal Bank means that a complete sale of the company is off the table.

 

Apparently some holders don't want to wait thirty years to see how this turns out.  Can't blame people for that. 

 

Goldstein/Bulldog really look like chumps on this one.  Hope I don't join them.

[TBW]

This situation is unbelievable to me!  Please allow me to vent.  This company just made an enormous mistake.

 

First they put out a press release stating the Beal Bank restructuring.  Very simple terms they would get paid 30% of all claims, the rest going to offset Beal debt.  Agree this took bankruptcy off the table.  My analysis shows that in pessimistic scenario they were looking at a funding gap of 10mil over next 2yrs but strong cashflows after year 2 that they could probably use to refi and survive.  Cool, issue a bit of equity, perhaps maturities are higher and drive on.  Seems like decent risk reward, I buy very small position.

 

They then put out a press release correcting the first one 4hrs later (2hrs into trading day) that is SUBSTANTIALLY different.  First they don't get 30% of claims they get 15% (so 50% less than just stated).  According to my numbers in the optimistic scenario they have a funding gap of 27mil and now weaker subsequent cashflows!

 

I have dramatically simplified the situation for clarity, but the above gives everyone an idea of the situation.

 

How in the world do you make a mistake like that???  I bought after first announcement think same as you Johnheiderscheit.  But the reality of the Beal deal is much much worse.  I emailed the chairman and IR saying how angry and unbelievable this all is.

 

I think part of the huge drop is bankruptcy is a very real outcome here and how can you trust management putting out a report so wrong???  How can they fund a 27mil gap (in my analysis) if their mkt cap is 21mil???

 

Luckily it was a very small position and I sold ~25% at 1.09 today, but still 40% loss because they put out the wrong press release?  WTF?  Interesting to see how they respond to my email.

 

Thanks for letting me vent  :o

[ukvalueinvestment]

It is ridiculous.  I think it's cheap on the metrics but the management are totally incompetent or crooked.

[ukvalueinvestment]

Please post the response to your email. 

 

Investor Relations have previously been super responsive but t the expense of an appropriately considered response, in my opinion.

[TBW]

IR responded right away saying "I share your frustration and promise to reach out shortly".  He must be just as pissed as we are I would imagine.

 

I email Phillip Goldstein directly.  Hoping to hear back for him as well.

 

My position is small but this is shocking to me they could get this so wrong!  And shocking part is they need capital, this type of activity has to give all providers pause.  Attractive to someone to purchase, but then management gets a big COC pay day... 

 

Still long a little and am too angry to know what to do.

[ukvalueinvestment]

I believe it has value as an option.  If it's a small position I would keep it.

[johnheiderscheit]

Well, obviously it is hard to see how the PR got so screwed up but several comments:

 

One, they will borrow under the credit facility to pay premiums.  That is where the short term cash shortfall will be addressed.

 

Two, the participation is 16.5% not 15%.

 

Three, not an excuse on the disorganization but based on the heavy selling at the open I think it was likely the controlling shareholders were up all night arguing.

 

Four, are they already trying to pick another fight with the SEC.  How can you have this type of announcement and not file an 8k?  Where the heck are their lawyers, still on holiday?

 

 

[constala]

"One, they will borrow under the credit facility to pay premiums.  That is where the short term cash shortfall will be addressed."

 

That's not the cash shortfall issue here. New Beale facility covenants impose that cash has to stay above 2x yearly holdco interests so >$@21m. But they only had $16.9m left at 31.12.16 so a recap or debt restructuring is urgently needed....and with this news release shambolic fuck-up they lost whatever stakeholder confidence they had, thus EMG is properly distressed.

 

I have to say that the long thesis for me was and still is dependent on Phil Golstein ethics and their reasonably good deal-making track; I still have "faith" but it is a bit shattered....

 

 

 

 

[BG2008]

Looked at this name a few years ago at the high $3 range.  The thing that I couldn't get over is why in the world should the discount rate by double digits.  Think for a minute, they are claiming that they are buying policies off from strangers who no longer wish to continue to pay their premium.  These transactions are typically done at a price much higher than all the cumulative premium paid into the policy at that point.  Before adjusting for SG&A expenses for the insurance company, Imperial is using a 10+% discount rate to value NAV. 

 

Let's invert the thought process.  If you are the insurance company, are you in the business of underwriting a policy where you have to earn 10+% in order to break even?  Does that sound like insurance company kind of IRR on their debt and equity portfolios?  Probably not. 

 

So, I called a few people who are top level salesman at NYC insurance companies and we came to the conclusion that the policies are likely NOT "whole life".  If they are whole life policies, this is a no brainer given the portfolio characteristics that they have indicated.  These are likely universal life policies (might've gotten the terms wrong) that have a guaranteed premium payment up till a certain age of the insured, i.e. 80, 85, 90, 95 years.  We don't know this datapoint.  In short, the insurance company is betting that the insured will survive past 85.  If they do, the premium gets upped to 5x the previous amount.  So, IFT shareholders own a "call option on the insured passing away by age 85 (picking a number here)"  If they don't, you're faced with the real dilemma that you have to pony up 5x the previous premium for the 86th year payment and it will likely escalate.  There is a huge difference between the value of a $1mm that you'll get by paying $30k of premium each year until the person passes away.  The longer they live, the lower the IRR, but it always makes sense to pay the premium as long as the premium amount is reasonable.  The later situation is quite complex and you'll likely stop payment once they reach that cutoff age. 

 

The industry has a reputation for over promise and under deliver.  Boone Picken's tried to gift an insurance portfolio with pre-arranged premium payments to OSU.  It turns out "rich people live a lot longer."  They're really caught in a pickle now.  Word on the street is that Imperial's management is average.  They don't have any secret sauce on how they source deals etc.   

 

Too many unknown unkowns here.  Not sure Bulldog's involve is enough to convert me into a believer.

 

2-3 years ago, I remember arguing with another investor who made a lot of money early on on Imperial/Emergent.  His argument was that Beal is a very smart investor and that's part of his reason why he feels that these policies will pay out many times.  I kindly reminded him that a debt investor underwrites his lending very differently than an equity investor.  He couldn't answer my "whole life" vs "universal life" comments.  He didn't know what's in the black box.  Because it is a black box, I didn't have the conviction to short this name.  But it seems walking away was the right call.  Now, investors may get lucky if a bunch of the senior citizens starts to pass away in large numbers.  These random events do happen despite our attempts at modeling the "death pool."

 

 

[TBW]

Contala is right.  The issue is funding the holdco.  Cash burn there is 10.5mil int and 16mil in other costs (salaries, prof fees etc).  At the moment they don't qualify for any distributions from Beal until they get to 2x int coverage in cash (which is impossible unless they equitize converts or get capital infusion) AND at Beal's discretion "That they have done enough to ensure solvency" (from 8k just released).

 

So Beal has put a gun to their head, either equitize converts (plus I think they need another 20 to 30mil on top for secd bonds and breathing room) OR sell.  Given they have less than 6 months of runway the sell price has obviously dropped a lot.

 

I don't see how else this gets resolved and I don't know that either outcome is great for equity holders here.  Open to any thoughts otherwise.

 

There did appear to be value if someone came in for a cheque to take out all debt now, cut HC costs and run this off.  But no one with cheap financing did...

[TBW]

I sold.  Too high a chance this is a 0 or very close to one after dilution for my liking.

 

I could be wrong and someone swoops in to buy, but I don't see that happening at prices an equity holder would like.

 

Will still follow, when this all shakes out there still could be an opportunity once funding method for this business is clear.