Portugal GV Fund Comparison?

Yes, the 50% profit sharing is the highest Iā€™ve ever seen in real estate sponsor type of deals. Thatā€™s whatā€™s making me pause as well.

Great to see true venture capital funds in Portugal, investing in new businesses.
Just bear in mind that these are typically 10 year funds, with a potential high return, but also high risk. If your objective is a Golden Visa and capital preservation, may not be the best fit.

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your insights are really helpful re Mercanā€™s hotel project. I am worrying the issue on construction which highly depend on developerā€™s financial status. No one really knows whatā€™s going on util 2022 June ā€¦

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I agree with you . I donā€™t really, understand the role of Quadrantis, which is named as fund manager re New Age fund. Quadrantis is a very small VC company , and only set up in 2016. They seems to be lack of experience in RE sector.

Hello Igor, these funds look really interesting. Have you reached out to them at all? Also would be interested in knowing who your lawyers are if you donā€™t mind sharing that info.

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Great discussion with some serious take home value. Thanks guys.

Over the last two months, Iā€™ve had a chance to take a look at a number of funds and either attend webinars or set up video conferences with the people behind the funds. I was able to get my hands dirty on Dunas Golden Bridge, PT Co, NEST, SIF, and New Age. I never heard of the Square CAPC or JPM, will look into those.

Initially I was pretty motivated to move ahead with a real estate purchase, but then this 350,000 Euros fund option sounded quite attractive. Especially since there are less fees involved.

In terms of the trust I felt, I would list them (from highest to least):

Dunas Golden Bridge,

PT Co

New Age

NEST

SIF

I felt that the Dunas Capital guys knew what they were doing, but they are at the beginning of the process, I wanted to see how they do with raising capital.

I liked:

  • The projects Gamma has under their pipeline, solid locations.

  • Their track record in the Portuguese real estate market

  • Their track record in fund management

I did NOT like:

  • They just started fund raising and only have something around 4,000,000 Euros yet (September 2020)

The NEST guys sounded like they were on top of their stuff at first, but after a few cross checking, I was disappointed to see that they were exaggerating their numbers (how much they raised and how many people subscribed already).

I liked:

  • The property they have in Alcantara looks really nice

  • They have had a fund before

I did NOT like:

  • They aimed to raise 100,000,000 Euros, but apparently they do not even have 1/5th of that

  • They extended their deadline once and thereā€™s talks that they will extend it once again now (October 2020), I would be pissed if I subscribed to it in early 2019; to me, this is a clear sign that their statements do not mean anything and they just want to use these deadlines to rush clients with urgency

  • They focus on commercial real estate properties, which will quite surely be dead for a couple of years once this COVID period is over

  • They have too optimistic targets

  • They have not closed on the properties they claim to have in pipeline for over a year now

  • The developer is selling off most of the properties on to the fund, for a handsome profit, while the subscribers are paying for it

  • Taking 50% of the profits is just UNHEARD OF.

SIF guys just sounded like typical salesmen, so I did not even consider pursuing their fund.

To be honest with you, I am ok with investing in a residential real estate fund in Lisbon as I believe Portugal will perform all right in the coming years. But, as @william.reichert pointed out, the funds in Portugal go through a lot of regulation, unlike the ones in more relaxed jurisdictions. I do not know if I want to be a part of that tightly regulated ecosystem.

Furthermore, most of these funds aim to dissolve the funds at the end of six years. That is very risky for me for two reasons:

  1. With the COVID, getting an appointment with SEF and traveling to Portugal for the biometrics is a nightmare, it may take a long time, exposing me at the end of the five year period

  2. If I decide to hold off a year to apply for my Portuguese citizenship, I will not have the chance with a fund, as they will dissolve the fund and so leave me with no investments that qualify me to renew my Golden Visa.

So, I am strongly leaning towards real estate once again. Unless a very attractive fund comes up in the near future, getting rid of the concerns I have stated above. (I know some funds are being cooked right now).

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Those are both very good points. While personally, I am very impressed with the presentations of Indico and Shilling compared to the other funds that have been marketed, you are very right both on the time that oneā€™s capital is locked up, and the relative risk of venture capital generally. Something that people should keep in mind.

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Yes, I would also be worried about having all of my capital tied to only one project. That seems quite risky. At least with the funds, even though you are tied to one sector (real estate or technology for the VC funds) and one geographic region, there is nonetheless some diversification of your investment.

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Some good points here. A couple things I would mention beckettmatthew:

  • PT Co is basically full. Their returns are also so low, I am not going with them.
  • I think you mean New Edge, right? Seems the safest, capital preservation fund out there but only 1% return per year.
  • I actually liked SIF more than it sounds you did but I get what you are feeling about being sold. I will lay out my views on them in a bit.
  • to clarify your comments on NEST ā€” The portugese govt approves a MAX amount they can raise. Most have goals far below that. So for instance, many say they are approved for 100M but their goal is only 20M. I would not make much of the gap between the two. Also, the fact they have moved their deadline twice I think is because of COVID and a last minute rush of interest. I did not see this as a negative, though they may not be approved for this newest request. It is up to the current investors and the govt to approve. Can you expand on the comment about the selloff please? I did not pick up on that.
  • Lastly, these all say something like a 6 year fund life but can add on extra years and often have a max life of 10 years. Yes, they can theoretically close after 6 years but then all the last minute investors would be out of luck for their GV. Worse comes to worse, the investors approve additional years even if every asset is sold off and your money sits until you get the GV. Not a major concern of mine personally but I see your view and concern here.

Since I last wrote I spoke with several funds, which I will summarize below:
Rock Capital: Aiming for two 3-year investment cycles in 65% residential RE in Lisbon to rehab and 35% in buy/hold in the Lisbon outskirts. They are inexperienced in running a fund but Lince Capital seems to know what they are doing. The two RC guys have experience in RE in Lisbon. Raising good money since their webinar it seems. I like they are co-investing and set high targets to get paid so I think they are very motivated.
Dunas Golden Bridge: buys shares in companies doing rehab of residential buildings in Lisbon but only those with permits already, to speed the process. Havenā€™t raised much money yet but they just started - and havenā€™t actually collected any money yet from investors. Gamma Capital seems good but has little experience in PT (mostly in Brazil). Has no projects started yet. Wont give any annual dividend.
SIF: Loans to/investments in companies with a set annual return. Started with two deals in RE (7% and 2.5% return) but has since pivoted to being close to a deal in a solar panel complex (5% return) Good manager in Lince Capital and raising decent money (half way to 20M goal). Will not use leverage at all (many do - make sure to ask!). Not looking for a home run - minimal 2.5% annual return, with a goal of 5%.
Portugal Yield Fund: Commercial RE buying buildings with tenants already in place. Open a year but only 4? investors and one project so far. Stated that rents in Lisbon area were decreasing. Uses a lot of leverage (40%) it seems. Interestingly, they incorporate the GV legal fees into their fund setup fees so you donā€™t have pay extra. They can do it for you or will give 7k credit to an outside lawyer for you.

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I have been doing a lot of research and am fairly along in the process. The funds make me very nervous. At least the real estate route provides something tangible that I have direct control over.

Hard to find the 350k options anymore I am told so you are talking about 500k and then the fees on top of that. I get the controlled feeling but personally I feel better with the fund rather than personally trying to find a good RE deal in the country (especially since I canā€™t travel there)

I hear ya! But there are many 350K options out there for RE. I may just wait until I can travel there to see them. Tough decision for sure.

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Just came off from Blue Crow webminar, who has a small operating fund focused on industry property since 2018. They claim that it is a retail fund and its initial asset was 5MEUR in 2018 and latest NAV in 2020 is 7.48MEUR. Their proposition is to increase the capital of this operational fund by adding agri land, and niche hospitality (in 12-18 months) assets. This round of capital increase will last till Dec 2022. Management fee 1% and annual profit sharing 20%.
I am a bit intested due to its track record, but need to to dig more. Can anyone attend this same webminar share some thoughts?

Iā€™ve been talking to Bluecrow some outside of this, I missed the webinar.

I like the basic proposition of the fund better than most of the others - itā€™s more of a ā€œfund that happens to be taking GVā€ as opposed to a fund aimed at GV investors, it has actual booked assets and cash flow and is operational, as opposed to sitting around waiting for seed money. At this point though Iā€™m waiting for Duarte to answer a bunch of other questions - I assume heā€™s been busy prepping for the webinar and will get back to me later.

Iā€™m interested in the Bluecrow fund too. I missed the webinar, but was registered so I could get the recording. Iā€™ve also got a call with Duarte next week when I hope my schedule calms down a little. I think all my questions as far as fee structure had been answered, just want to get the nuts and bolts details of what the moneyā€™s invested in and a bit of the firmā€™s history.

Hi @mmd. Would you be able to share the presentation and recording. I missed the webinar as well.

Thanks

Definitely, I still havenā€™t received it yet so hopefully in the next 24 hours.

I went through NEW Ageā€™s Fund Management Regulation issued by fund administrator- QUADRANTIS CAPITAL. some key findings and my comments here :

  1. Maximum targeted amount: 35,105,000 euros. The share unites are classified as A and B class, A class represents investors interested, while B is subscripted by Fund administrator with a minimum amount of 52,500 euros (similar structure to LP and GP in VCs)
  2. Fund raising period: up to 30 months after the beginning of subscription. I checked with CMVM which addressed New Age commence date was 18/03/2020. (I donā€™t know how much they have raised so far, but 30 months is too uncertain to jump in for any early enters.)
  3. Fund Duration: 10 yrs and would be extended for additional period of up to 10 yrs if approved from participants. (That term might aim to meet the GV applicants if they enter the fund in 5th or 6th year. )
  4. Fund administration fee, 0.5% which I think in like with mkt level.
  5. Investment policy:
  • priority targets are SMEs
  • the instruments include equity, securities , convertible rights, loans and credits, hybrid instrument
  • to provide credit guarantees to investee
    (It seems its investment policy is a pure risk capital basis)
  1. Leverage: the fund may have leverage up to 80% of itā€™s assets under management . ( it sounds awful)
    7 . information disclose: the annual report will be released at the whole accounting year(31 Dec).( it means no regular half year report. Investors would have no idea to get the value of stare unit within one year)
  2. redemption and liquidity: it looks no mkt channel to liquid your holding units until the fund is closed after the lock-up period. there is some clauses on share transfer, which should be approved by fund administrator, but I suspect the transfer btw exiting investors and potential subscribers might be difficult to be carried out.
  3. Auditor: itā€™s local KRESTON & ASSOCIADOS. It is not consistency with their presentation, which shows PWC.

I donā€™t find key info re their assets allocation on this Management Regulation. I should ask the sender what it means 40% JPM gov bond+60% SQUARE Asset. However, given above findings, New Age should be a pure VCs style with high risk level.

any thoughts from friends here would be grateful! @beckettmatthew @jb4422 @william.reichert

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@jb4422
@mmd

Would you mind to share you findings/Q&A summary after you talking to BlueCrow? I understood there is distribution fee as it is retail fund. Pls correct me if I am wrong.
Thanks in advance.