Beneficient Q2 FY2024 earnings call

• Ben's mission is to transform illiquid private investment markets into more liquid ones. - It identifies three building blocks for liquid markets: investment opportunities, transparent information, and market participants providing liquidity. - Ben Liquidity and Custody segments, with fintech capabilities via AltAccess platform. - Since listing in June, secured financing, enhanced AltAccess, and expanded liquidity products. - Long-term strategy includes building technology, expanding offerings, and organic growth with potential strategic transactions.

Ben Liquidity recognized $13 million in interest income during the three months ended September 30, 2023, compared to $10.9 million in 2022. Costs in Ben Liquidity were $285 million, primarily due to a noncash goodwill impairment charge of $220 million and a credit loss charge of $61 million, resulting in a $272 million quarterly operating loss; on an adjusted basis, it generated a $5 million operating loss. Ben Custody recognized $6.5 million in interest income during the three months ended September 30, 2023, compared to $7.8 million in 2022. Costs in Ben Custody were $87 million, primarily due to a noncash goodwill impairment charge of $86 million, resulting in a $81 million quarterly operating loss; on an adjusted basis, it generated $6 million of operating income. Combined, the operating loss of these two business segments, along with corporate and other, was $378 million in the quarter. The net book value went from $2.7 billion as of March 31, 2023 to $1.2 billion as of September 30, 2023.

• Packaging financings and selling to institutional buyers to recycle capital. - Target to build the business to scale to reach profitability. - Initial aim is to build the business to the scale where it starts generating more profitability.

• Macro uncertainties and risk of further economic deterioration.

Q: What is the total NAV of the collateral underlying your financing, and how does it break down between larger versus smaller transactions?

A: Since inception, Ben has provided financings with underlying collateral of approximately $1.2 billion of NAV. With approximately 87% in transactions larger than $50 million, the remaining $156 million was in transactions smaller than $50 million.

Q: How many different private interests has Ben financed?

A: Since inception, Ben has financed 376 distinct funds and other private interest. Today, there are approximately 276 distinct position underlying our financings and held in our trust accounts.

Q: How does Ben plan to finance the growth of the balance sheet?

A: Packaging our financings and selling them to institutional buyers allows us to recycle capital. On the financings we hold to maturity, we use the cash of those financings to fund not only our corporate and operating expenses but also the fintech costs related to our investments in developing the technology and our scale.