The insider's guide to the Jerome Fisher Program at the University of Pennsylvania

My M&T Summer Internship: Arena Investors

In the summer of 2007, the M&T Program launched the Intern Fellowship initiative to assist students in the pursuit of internships at early stage companies. Now in its tenth year, the Intern Fellowship Award provides partial summer support to selected M&T students who are pursuing an entrepreneurial venture over the summer. Preference for the award is given to internships offered by or through M&T alumni.

This past summer, Sohum Daftary (’19) was one of 25 students who received an Intern Fellowship award, 14 of which worked with M&T alumni. Sohum shared his expertise working for Arena Investors, founded by M&T alumnus Dan Zwirn (’93).

I secured my summer internship through the M&T office’s recruiting efforts, which were in the form of various emails sent to the M&T class regarding interesting opportunities for sophomores’ summer internship. I was particularly interested in Arena Investors, which was founded by M&T alumnus Dan Zwirn, who previously ran the $12 billion firm, D.B. Zwirn. I applied early in the spring semester and, after two rounds of interviews, was thrilled to receive the internship.

At Arena Investors, I was placed at the structured finance desk. The three key projects I worked on included a film asset revolver, an escrow purchase from a liquidation, and a model to predict the health of housing markets based on demographic trends.

Project #1: Film Asset Revolver

The film deal was the majority of my contribution to Arena as I had the opportunity to author the downside risk mitigation portion of the internal investment. In this deal, we were financing the purchase of film assets for a distribution company that generated royalties from tickets and views on all major platforms (Amazon, Netflix, Hulu, etc). The cash flows from these assets had non-linear trends and different film assets had different distribution agreements.

To determine the risk to our different loans, I modeled the cash from the assets and tested yields under a variety of scenarios. After this analysis, I designed a backward-looking recoupment curve covenant and a forward-looking projection variation covenant. I made simulations showing the two covenants combined gave senior note holders about a 35% safety margin on recoupment and actively negotiated with the CFO of the company on the implementation of the covenants.


Project #2: Escrow Account Purchase

The second project was the purchase of an escrow account from a bankrupt tobacco company. I performed due diligence with the sponsor, wrote the investment memo, and created a structure for the transaction. I found this project incredibly interesting: I went into the depths of laws from the 1990s that forced tobacco companies to keep escrow accounts as a result of the master settlement agreement between big tobacco companies and the states. Basically, the money in the escrow account is locked for 25 years, but through a complex disbursement process, it was possible to recover about 50% of it today and collect the rest over time.


Project #3: Predicting the Health of Housing Markets

For my last project, I created a model determining the health of local real estate markets based on socioeconomic trends. After performing a literature review of pricing models and econometric methods for determining the impact of certain variables on price, I collected data from various public sources that tracked demographic changes. While it was difficult finding data with granular coverage at the locality level and a high frequency of data updates, I was able to create a statistical model. This model allows a user to input any US address and produce a score based on the address’ local trends. With this, firms can quickly filter through thousands of properties. For those seeking to make real estate investments or purchase pools of mortgages, this could save time and help identify high yielding markets.

My experience this summer certainly helped me plan my career path, as this internship strengthened my interest in investment banking. Working on the deals at Arena exposed me to credit in a very structured manner. And, after working on the distressed escrow asset purchase and observing the legal and financial risks, I determined that restructuring advisory would be an ideal place to work for the next summer.

After interviewing at multiple firms, I decided to intern at Millstein & Co, a boutique restructuring advisory firm, this coming summer. I know my experience at Arena played a major part in helping me secure the position. I’m grateful to the M&T Program for helping support my internship experience and look forward to seeing how it shapes my future!

Sohum Daftary is an Electrical Engineering major in the Class of 2019. He is concentrating in finance and management and operations, and plans to go into restricting related to investment banking after graduation. His favorite thing about the M&T Program is: “The people. The alumni, students, and staff are some of the smartest and most resourceful people on campus.”

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