#187: Exploring Tax Receivable Agreements: The Hidden IPO Catalyst
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Welcome back to another episode of The Richer Geek Podcast! In today's episode, Andy Lee, the Founder and Chief Investment Officer of Parallaxes Capital, joins us to discuss his journey into capital investment and the founding of Parallaxes Capital, the only asset manager dedicated solely to Tax Receivable Agreements (TRAs). They explore the emerging world of TRAs, a unique asset class gaining popularity in major IPOs like GoDaddy and Shake Shack. Andy explains what TRAs are, how they function, and why they're becoming an essential tool for companies going public. He also addresses some common misconceptions about TRAs and shares how Parallaxes Capital is educating and providing liquidity to TRA holders.
In this episode, we’re discussing…
Introduction to TRAs: Learn about Tax Receivable Agreements, a growing asset class used by companies during IPOs to create long-term cash flows similar to royalties.
History and Evolution: Andy explains how TRAs evolved, comparing them to other asset classes like mineral and air rights, highlighting their hidden value.
Opportunities and Criticisms: Discover the benefits TRAs provide to founders and shareholders, along with some common criticisms, such as the perception that they mainly benefit company insiders.
Parallaxes Capital’s Role: Understand how Parallaxes Capital supports TRA holders by providing liquidity and educating them on the value of their assets.
Investment Insights: Insight into how TRAs create uncorrelated returns, making them an attractive option for investors seeking diversification beyond traditional assets.
Resources from Andy
Resources from Mike and Nichole
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ABOUT ANDY LEE
Andy Lee founded Parallaxes Capital in 2017 after working at Lone Star Funds, where he focused on investments in the Americas. He began his career at Citigroup and holds a Master's in Accountancy and a Bachelor's in Finance and Accountancy from the University of Illinois at Urbana-Champaign.
Recognized in the 2020 Forbes 30 Under 30 list, Andy has been featured in the WSJ, Institutional Investor, NBC, ReOrg Radio, and Fitch’s LevFin Insights. He has spoken at events for the Association of Asian American Investment Managers (AAAIM) and at prestigious institutions like the Wharton School of Business, University of Illinois, and Texas Christian University (TCU).