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Death, taxes, and other opportunities for private credit

Private credit seems to touch every corner of the finance world: from wonky asset-based transactions, life settlements, to now, taxes.

Or at least, tax receivable agreements (TRAs), which are giving credit investors yet another way to cash in on esoteric corners of the market.

Enter Andy Lee, the man behind Parallaxes Capital, who swoops in offering cash to holders of tax receivables tired of waiting for their payouts. Clients can get fast cash now, peace of mind later. Lee's firm dominates this quirky market, which went from $8 billion in 2017 to a whopping $30 billion this year.

But what exactly is a TRA? It’s a bond-like instrument, which usually comes about during an IPO or a merger and provides pre-IPO equity holders with payments derived from the company’s future tax benefits related to the depreciation and amortization of assets.