Portugal GV Fund Comparison?

Definitely, I still haven’t received it yet so hopefully in the next 24 hours.

I went through NEW Age’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 don’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 it’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: it’s local KRESTON & ASSOCIADOS. It is not consistency with their presentation, which shows PWC.

I don’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

@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.

can pls share any info with Bluecrow? I missed the webinar too . thanks lot!

Hi @pigletjulia, @rogergan68, @mmd, @jkandalam, @jb4422 — If you registered for the webinar I will send you the recording as soon as I receive it from BlueCrow.

If you didn’t register, please shoot me a message so I can add you to the list of people to share it with!

Hi Thomas

Seems I may have missed registering as well. You had kindly sent a link but probably slipped through the net. If you can pls add me now to the list of people to share with, would be greatly appreciated.

Regards
Jayanth

@drlward Thanks for the reply; I do agree with your points in general, except:

  • New Edge sounded like a clean deal to me, regardless of the 1% return annually; it looked like a safe parking position, but still I am a bit scared to step into VC style risk level @pigletjulia thanks for your detailed
  • the excuse behind NEST’s first extension was Covid, but they did manage to (at least claim to) get more subscribers in the meantime, this second extension just looks greedy to me, and I am scared to step into a deal when the other party keeps changing their promises. maybe something wrong with just my principles…

@leesmolinski I am with you, I am getting colder and colder to these funds, the risk is just not worth it. it’s true, what you find in the market for 350,000 euros and 280,000 euros (renovations) is getting slimmer, but they will still give me a much better sleep at night than these funds overall.

Nevertheless I would be curious to hear more about the Blue Crow option before I make my final decision.

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It’s very interesting and useful discussion. Thank you all for deep investigation and good points to have in mind.
I’m new in investment and my main target is residency, so I estimate this investment in terms of risks.
I dont focused on getting income – I guess it possible be very low in current environment.
I think that moderate bad forecast for all fees according to servicing investment to fund will be around 80-120k EUR in 6 years. It is just cost to support investment. (another cost is for attorney, bookkeeping, and SEF). Quick estimation is up to 200k eur of costs for 1 main and 3 dependents for 6 years.
It is not risk – just estimated direct expenses (moderate bad).

From the point of risk I see:

  1. Term of share return. How and when and under what conditions share will returns to me? What means “6 years but can be prolongated for more 6 years if participants agree”? If I ask to exit but other participants not, will I get money back? Another point: As far as I understand to return money to investors fund management have to sell all underlayed assets? What if it will takes some time? For example 10 or 50 years more? How exit regulated in fund documents? Are there differences in different funds?
  2. Volume of return. I dont know how much will be my share (underlying assets) after 6 years. Maybe almost nothing. I think main criterias here are diversification, no VF.
  3. Fund bankruptcy. I know only one criteria for now – no leverage.
  4. SEF risks: Should I top up my investments after my share market price recalculation? Should I invest more 350k in case of fund bankruptcy? What if after 1-2 years fund management will decide to change investment policy (“Bitcoins are so cool!”) and will go out of SEF regulations for GV funds? Is it somehow regulated?

May be you have some information or considerations about these thoughts?

Hi there Julia - your email address was removed from your post. Not sure if they don’t want those publicly posted or not.

[Moderator note: Please use the built-in messaging system rather than posting your email address publicly]

Is there an option to move the money and buy publicly traded shares like Nestle while holding them with a broker in Portugal?

By my understanding, Only VCs or PE or directly investment in equity of SMEs would be eligible for GV application

Hi Julia,

Happy to offer some general thoughts from my personal perspective on investing in a fund. I will not respond to each of your points below, in part because it would make the post too lengthly, but more so because in my opinion it is important not to get too caught up in the details (otherwise, you can go crazy trying to compare all of the different variables of the various funds!). I would be happy to offer my thoughts offline on any particular questions though if that would help.

So, with that out of the way, I also want to note that I am definitely NOT an investment professional by any means, and that these are only my personal opinions as I try to compare the various funds to consider which investment I will make. I have worked with private equity funds quite a bit over the years, and from what I have learned, the most important things to consider when evaluating a fund are the team behind the fund and their track record. And that is because, at the end of the day, you are really investing in the skills and knowledge of that team.

For that reason, I am less concerned with whether the management fee is 1% or 2%, and also less concerned with the size of the fund, how much leverage they are using (within reason), who the auditors are, and certain other variables. That is not to say that these are not important metrics as well – for example, if a fund is too small, that can be a major drawback, because: (1) they may not have sufficient capital to execute the projects in their mandate; and (2) remember that the management fee (i.e. the money that they are paid until assets are liquidated) depends on the size of the fund. And so if the fund is small, they fund managers will be living off of peanuts (and so theoretically may need to something else on the side to pay the bills!).

Personally (and again, this is just how I am looking at this, and others may disagree), the things that I am going to focus on are first and foremost the makeup of the team (what is their background and experience) and their track record (have they already managed a fund, and if so, how did it do). It is then also very important of course to be comfortable with the sector (and in fact, this should probably be the first criteria for evaluation). It is a very different thing to invest in a real estate than a (true) venture capital fund (i.e. one that is investing early stage money in startups). Both have their advantages and disadvantages and one is not necessarily better than the other. It is rather a question of how that particular sector is doing in the location, and more importantly, how it is likely to do over the life of the fund. And then it is also a question of how much risk you are willing to take (knowing that, in the end, we are all making educated guesses as to how each of these funds will perform!).

As for me, I am still very undecided. There are some funds that are definitely not of interest for me, for reasons that I will not get into here. I personally like the two “true” VC funds that I have seen, and that is partly because these are experienced fund managers with an established track record, and their documentation seems much more in line with what I have seen with other funds. But it is also probably because I am somewhat comfortable with VC funds as I have worked with them a good deal in the past.

But that does not mean that I am counting out the RE funds. I am still very impressed with the economics behind Rock Capital for example. A very low management fee of 0.5% (industry standard is usually 2%) plus a hurdle of 30% is unheard of! (That means that basically they don’t make any money AT ALL unless and until the investors make a 30% return!) This to me (plus the fact that they are investing their own capital) means that they are very confident and will be highly motivated! I would otherwise be concerned that they do not have experience managing a fund, but this model may be enough to make me overlook that.

Anyway, I have still not made up my mind, but that is where my thinking is at this point. I hope that helps.

Bill

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I wouldn’t be too hard on Nest for extending. That is not necessarily unusual, particularly if there is strong interest. It is not necessarily a question of greed – rather, the more they can raise, the more projects they may be able to execute.

On another point, while I understand the relative comfort of owning land (at the end of the day, if everything goes wrong, you still have a piece of land, even if at a heavy discount, while with a fund, you just have a piece of paper), you should bear in mind that there are a lot of additional costs (and this assumes that you could find a piece of land at EUR 350k, which was actually worth that, and not just heavily inflated for GV investors).

I doubt it as the idea is to encourage investment into Portuguese companies, so I think that this is where your money has to end up.

Well, if you use the EUR1mm option, then potentially yes. There don’t seem to be the same limitations. But I don’t know, having not looked at it closely.

  1. The answer depends on the fund. you have to dig into the real details of each fund. there’s no alternative.
  2. always a question.
  3. probably low chance of total bankruptcy. there appear to be only a few players in the space and if you stick with the larger players they probably are competent and won’t lose it all for you. but you could still lose a lot of money.
  4. you don’t have to invest more money. if you invest the 350k originally, that meets SEF requirements, AFAICT. as long as you don’t sell the shares/units you bought, well, it just means that you contributed to Portugal’s economy in a different way than you had hoped. I imagine in case of fund bankruptcy some accomodation will be made, though you should speak to a lawyer on the point.
    4a) in general, the fund will have a management regulation document. That will state the objectives of the fund. To change that document will require a vote of the unit holders to approve the change. The management regulation document is registered with the CMMV(? fund regulatory agency) and is subject to government oversight. So you don’t have to fret about that. You will want to read the management regulation document to verify that is true before giving them your money, but that is generally the case in any VC fund.

your 200k of costs seems a little high by the way.

I have a presentation from Quadrantis for their renewable fund which seems interesting and may soon have a chat with them on it. True, did not like the dynamics of the New Age fund either, so have decided to skip on that and Nest. I have been speaking to Artur who not only happens to be a partner in Rock Capital but also one of the founders of GCS which is a immigration consulting (including for Portugal GV).

Would be interesting to hear if any one else has heard or spoken to Quadrantis on the aforementioned renewable/energy efficiency fund?

Thanks

Thank you, Jeff.
I’ll dig into funds details term of investment is important.
If i’ll find something interesting I publish it here

Hi Bill:

Thank you very much for your comprehensive review! !

I agree with your on most differences btw RE and VCs. I personally don’t believe RE investment would be usually safer than VCs, but my key concern on the current VCs offered on Portugal mkt is almost all of them have little enough track record to prove what they have stated on the presentation. I had abandoned both NEST and NEW ADGE , and might try to dig out more sth different on Bluecrow. Given the highly possibility of adverse effect on PT property mkt in near future, I admit it’s also very hard for investors to identify feasible projects with less risk than RE Funds.

I have yet made my decision too but still keep interests on Mercan’s Lapa Renaissance hotel. Should share more details once investigating more.

Thanks again!

What’s the name of their renewable fund? I have yet got such presentation on the mkt. I guess Quadrantis might only issue NEW ADGE Fund at this stage?

Pls correct me if sth wrong. thanks!