What is EQTY Capital?
EQTY Capital is an advisor to the EQTY Funds ("The Funds"). We are not the fund managers. The Funds are managed, from a regulatory and administrative perspective, by regulated fund management companies in Portugal.
Will the Funds invest in assets in primary locations, restoration areas, or strategic locations?
The Funds EQTY Capital will invest, via SPV's, in a mix of locations geographically. The nature of Portugal means that strategic locations as well as prime locations are in need of restoration. Furthermore, the Funds will also invest, via SPV's, into commercial properties with long term AAA tenants. Diversity is key and what is important to consider is that each investment is not limited to one income stream, for example short term v long term rentals.
Which funds, as highlighted in the deck, are available for subscription currently?
The Prime Residential and Balanced Portfolio funds are fully subscribed and closed to new investors. The Global Growth fund is circa 90% subscribed and still open to investors. Two new funds, the Prime Portugal and Balanced Plus funds were recently launched.
Has the EQTY management personally invested in the EQTY Capital Funds?
Yes, and in addition, EQTY Capital LDA also holds units of participation in the funds.
Who are EQTY Capital's top 3 competitors?
The Funds EQTY Capital are advisors to are unique in Portugal with the use of sub-funds. With regards to Golden Visas there are a number of funds eligible for investment. Looking at what is on offer, EQTY is an elevated option offering a platform of options as opposed to a single developer focused fund. A significant make-up of the team is focussed on good governance and compliance. This sets EQTY apart further.
What is the expected IRR of the Funds? Are they planning on distributing annual dividends?
The expected IRR is between 50% and 63% conservatively targeted depending on the fund or sub-fund chosen by the client. Clients are also able to blend their investment across sub-funds. Annual dividends will be distributed depending on the performance and liquidity available bearing in mind that the Funds will in majority be investing off-plan and dividends are therefore anticipated mainly from year 3. The targeted and expected performance are dependent on the future performance and liquidity of the Funds.
How much are the Funds trying to raise?
Sub-Fund I and Sub-Fund II, which are both fully subscribed, raised €45M together. The Global Growth Fund, which is subscribed at circa 90%, will raise €40M. As for Sub-Fund III and Sub-Fund IV, they aim to raise €30M each.
What is the annual management fee? Are there any hidden fees?
Fees are simple: 1.5% (Annual Management Fee), and 1.5% one-off subscription fee (minimum fee of €1,250 and capped at €5,250).
How do The Funds diversify risk through a balanced portfolio selection?
Diversification is considered top to bottom not only in type of investment but also location. This is even true in the Residential-Only Fund as investments will be made in various locations, in assets of differing values and developers.
What is the target investor profile?
While investment is from €50k for the Sub-Fund III and IV, the minimal investment is otherwise €100k and up. The Funds are also suitable for investors seeking alternative residence and eventual EU passports.
Are the Funds CMVM registered? Will pending regulatory changes affect the Funds?
The Funds are regulated by CMVM. All information regarding the registration of the Funds can be found under the Private Equity and Venture Capital section of the CMVM website.
How long will the investment be locked in for?
The Funds have an 8-year lifespan which can be extended for a period of 2 years should the need arise. If the investment is being made for Golden Visa purposes, the investment must be maintained for at least 5 years, but is dependent on processing times.
Does the Fund have any potential extension period?
There is a 2 year extension option available subject to unit holders' approval.
When does the subscription period end?
When is the Fund closing / maturity date?
8 years with exits from investment occurring from year 6.
What is the structure and background of the team?
FundBox SCR and STAG SCR are experienced teams, with strong track records and established reputations for aligning interests with investors expectations.
Do the interests of the investors match those of the Fund Managers? Are incentives the same?
Is there a performance fee at exit? Will this be a percentage of the profit?
From an investor's perspective, what tax implications would he/she need to be aware of?
How long has EQTY Capital been in existence? Would you have a chart depicting the total returns (annualized) generated since inception?
Three EQTY Capital Funds were launched in 2021, namely the EQTY Prime Residential, EQTY Balanced Portfolio, and EQTY Global Growth. All three funds are at the initial stage of their acquisition phases.
Is EQTY Capital the one that has approval from CMVM to operate the fund or will this be run by another (local) entity? If it's the latter, will this not increase the overall risk to an investor?
EQTY Capital is the advisor to the EQTY Funds ("The Funds"). We are not the fund managers. The Funds are managed, from a regulatory and administrative perspective, by regulated fund management companies in Portugal. If anything, this should add comfort to investors, as it is the regulated fund manager’s responsibility, through their Investment Committees, to verify whether the assets EQTY Capital is proposing for acquisition are of good value to the Funds, ensuring that the investors’ best interests are at the base of any decisions. Additionally, the fund managers report frequently and directly to the Portuguese market regulator, CMVM.
I found details on the executive members and core team in the deck, however, I couldn't find information on the fund manager (who is he/ she, what's the background, what's their strategy to manage the portfolio/ optimize risks etc).
FundBox is the manager for the EQTY Capital Fund I, which comprises of 4 sub-funds, namely Prime Residential, Balanced Portfolio, Prime Portugal and Balanced Prime. STAG Fund Management is the manager for the EQTY Global Growth Fund.
I notice that there will be an exit option that can be exercised after year 6 (subject to liquidity of the fund) by the investor. Is there any additional expense to be borne by the investor for exiting at this point?
Does the investor have a choice between a growth option (i.e., dividends reinvested) or a dividend distribution option within this fund?
All of the EQTY Capital Funds pay dividends on a quarterly basis, depending on the performance and liquidity available. The dividends are not reinvested.
If I understood correctly, the target RR for the portfolio is between 7-8%. Is that after deducting all applicable set-up fees, AMC and any other expenses?
All target returns, including IRR, are net of all costs, fees, charges or profit-share.
Is there any exit load on the fund (at the time of withdrawal)?
The EQTY Funds have 8 year terms. Initial exists are permitted in the 7th year. Investors wishing to exit before the 7th year are free to sell their units of participation to an incoming investor. Neither option is subject to an exit load. Unit holders investing for the purpose of the Golden Visa should be aware that it is likely to take approximately 7 years to obtain a permanent residence visa and/or citizenship.
What are the biggest risks in the fund(s) and how much draw-down from the portfolio should investors prepare for (on a worse case scenario)?
The target returns for the EQTY Funds, which are dependent on the performance of the Portuguese and other real estate markets, are the result of a conservative approach. For example, annual capital appreciation on prime residential property in Portugal has been at around 8%. The Funds’ target returns have assumed capital appreciation of circa 3.5%.
How can an investor check the performance of the fund?
The fund managers are obliged to report to unit holders twice a year and a quarterly report will be provided and an online portal will be made available to unit holders in Q2, 2022. The portal will provide information such as the value of the investor's units of participation, acquisitions made by the Funds and overall performance of the assets. In additions, Investors are able to see the value of their units in their Portuguese bank account as the units are registered, via Interbolsa, with an Investor's personal bank.
Does a non-resident in Portugal need to file taxes annually, even if only income is from the fund distributions?
As a non-tax resident, you would not be required to file an annual tax return in Portugal and the tax on dividend and capital gains from Venture Capital funds is 0% for non-tax residents. Independent tax advice should be sought before making any investment decisions.
What are the options if the fund closes prematurely (including the impact on the investment as well as GV status)
The Funds do not close prematurely. If anything, a new fund manager may be engaged to see the fund through to maturity, meaning your GV status would remain unaffected, irrespective of the value of your units of participation in the fund.
Do you have preferential rates for GV legal assistance?
What is the communication strategy with the investor(s) once the fund is fully subscribed?
The fund managers are obliged to report to unit holders twice a year. In addition, a quarterly report will be provided and an online portal will be made available to unit holders in Q2, 2022. The portal will provide information such as the value of the investor's units of participation, acquisitions made by the Funds (via SPV's) and overall performance of the assets.
How do I change or reset my password to access EQTY's platform?
Would you like to know more?
Feel free to call us +351 215 950 000 or send a message below.