WineFi Weekly: What is a Syndicate?

In this edition of WineFi Weekly, we’re talking about:

Our syndicate structure, how it works, and why it benefits our investors.

Introduction

Given you are reading this newsletter, chances are you will have come across our wine investment syndicates. This newsletter deep-dives into why we believe this structure will help transform fine wine into a mainstream asset class, and the benefits that it offers investors.

Direct Asset Ownership through a Bare Trust Nominee

In our context, a syndicate is a structure that allows investors to co-invest in a portfolio of fine wine. Unlike in an angel syndicate, where investors would invest in an SPV that in turn invests in a company, our bare trust nominee structure ensures that investors own a % of an actual wine portfolio outright.

In short, it means that investors hold the asset directly.

What does this mean for investors?

• Capital Gains Tax Exemptions: Most importantly, for investors in the UK or elsewhere where fine wine benefits from Capital Gains Tax (CGT) exemptions. Our bare trust nominee structure ensures those exemptions carry through to the end investor, in a way that they wouldn't if investors were holding equity in an SPV.

• Beyond ensuring CGT exemptions carry through, it also means that investors can benefit from the following. (A) maximum diversification at the lowest possible cost and (B) investors maintain day-to-day control of the assets via a voting system and (C) lower costs. Our structure falls outside the need for FCA authorisation. The reduced overheads versus a regulated structure means lower fixed costs for us, and therefore lower fees for our investors.

The Operator (WineFi Management Limited) manages the operations and ensures proper execution of the syndicate’s goals, including sourcing and acquisitions.

The Nominee (WineFi Nominee Limited) holds the legal title to the wine assets on behalf of the syndicate members within the framework of a bare trust, where members retain beneficial ownership of the assets.

Co-Investing: Lower Entry Costs, Greater Diversification

Our syndicate model is based on the principle of co-investing, which offers two key advantages:

• Reduced Barrier to Entry: By investing alongside other investors, you can access high-quality fine wine investments at a fraction of the cost of building a private collection.

• Enhanced Diversification: Co-investing allows you to spread your investment across a wider range of wines, vintages, and producers, reducing risk and potentially increasing returns.

Not a Fund: Best-in-Class Fees

Unlike traditional investment funds, our syndicate structure is designed for efficiency:

• Low Operating Costs: Our lean structure means we have lower overhead expenses vs a regulated structure.

• Competitive Fees: The cost savings are passed directly to you, allowing us to offer best-in-class fees that are significantly lower than traditional fine wine funds or managed portfolios.

• Day-to-Day Control: Unlike a fund, investors maintain day-to-day control over the underlying assets via a voting system, up to and including ousting WineFi as the operator

Opportunistic Sourcing

Our investment process is designed to maximise opportunities in what is an ever changing fine wine market:

• Producer-Level Focus: We outline the 'permitted investment' at the producer level rather than specifying exact wines or vintages.

• Opportunistic Buying: This flexibility is crucial, allowing us to react quickly to market conditions and acquire the best wines at the most advantageous prices.

• Adaptability: As market trends shift or exceptional opportunities arise, we can adjust our purchasing strategy within the permitted producer list - this prevents WineFi being obligated to purchase assets that are priced above our target threshold.

The Fine Wine Collection: Our Latest Opportunity

We're excited to announce that allocations are now open for our third co-investment opportunity: The Fine Wine Collection.

• Curated Selection: This collection represents a carefully curated selection of some of the world's most prestigious and investment-worthy wines.

• Diversified Portfolio: The collection spans multiple regions, producers, and vintages to provide a well-balanced investment opportunity. If you want to invest in one opportunity for balanced exposure to the fine wine markets, this is the one.

• Data-Backed: Each of these wines is selected using historic pricing, and other data points across hundreds of thousands of wines. Each label is assigned a WIS score, and every potential offer is analysed against market prices both within and across vintages.

• Growth Potential: Selected for their quality, rarity, and potential for appreciation, these wines offer an excellent prospect for long-term value growth.

Fine wine is an alternative and illiquid asset class and should only form a small part of a well-diversified portfolio. The value of your investment can go down as well as up and you may not get back the full amount you invested.