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David Pullman, C’83, believes that shrewd investments don’t have to be “plain vanilla” to pay off, so, like a “Rebel Rebel” in the bond business, he recently structured a deal to securitize the future royalties from rock star David Bowie’s first twenty-five albums. The Bowie bond sale was the first of its kind.

It allows Bowie to collect $55 million up front, using some of the money to buy out a former manager and keep control of his music, explains Pullman, managing director of Structured Asset Sales Group, a division of Fahnestock & Co. in New York. The musician’s consistent sales track record — more than one million albums a year — enticed private investors to put their money into the 7.9 percent, 10-year average life bonds, Pullman says. “He has some songs going back twenty-five years that are still selling today, and they will still be selling [in the future].”

Unlike many artists, Bowie had kept control of his copyrights and master recordings; the distribution license for his first twenty-five albums was due to revert back to him in June. He, along with his managers at the Rascoff Zysblat Organization, had been debating whether to sell his masters and copyrights, or to license them out. RZO is a client of Pullman’s company, and Pullman happened to be talking with Bowie’s manager, Bill Zysblat, on another matter when he learned of the musician’s uncertainty. Pullman suggested the Bowie bonds. Although the deal took about four months to put together from securing a rating to lining up investors, it didn’t take long to convince Bowie of its merits, Pullman says. “He was a very intuitive guy. He picked up on it instantaneously.”

(There are two other Penn connections here. Joseph Rascoff, C’67, a cofounder and co-owner of RZO, is a Penn alumni trustee. College junior Jeremy Palley interned with Pullman’s firm this winter and assisted in the Bowie deal.)

There was more than Ziggy Stardust in Pullman’s eyes when he suggested the arrangement. He says, “There’s a huge amount of wealth in this country in intellectual property, that being record masters, publishing, syndication, TV, film libraries, high tech licenses, biotech licenses… You can do any deal if you do it right.” Before the Bowie bonds, for instance, Pullman was involved in securitizing the cash flow of a Hollywood studio’s film library. So why haven’t other firms caught on? “Most other investment banks do things plain vanilla,” Pullman says. To come up with something like the Bowie deal, “You have to be very creative. Typically this work, [asset-backed securities], is so detailed and quantitative that people don’t have time to think about doing new things.”

Pullman’s firm is now working on similar arrangements with other major musical artists, which he wouldn’t yet name. “Everybody’s been coming to us.”

By Susan Lonkevich

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