How we select and designate our sponsors
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A Sponsor is a real estate developer, operator, or capital provider. The Sponsor is responsible for finding, acquiring, and managing a deal through the life cycle of the project. They contribute to the equity, raise additional private equity capital from institutions or high net worth investors, and secure any additional leverage. The sponsor is responsible for the performance of the investment, and for reporting to investors and distributing returns
Our marketplace lists investment opportunities (“deals”) from a wide range of real estate investment firms, developers, and capital providers (‘Sponsors’). They all share our core requirements of extensive management expertise, niche sector experience and a focus on protecting investor capital. However, not all Sponsors are equal in terms of size, years of operating and assets under management (AUM).
To assist our investors in making decisions that suit their personal portfolio strategies, we designate our sponsors into four categories: Emerging, Developed, Established and Tenured.
Each sponsor is assessed against a range of criteria to determine their designation for our platform.
Minimum Sponsor requirements
All sponsors must meet our core minimum requirements:
- At least 20 years combined management experience in a niche real estate sector and managing private equity investors funds in projects.
- A direct investment into each project of at least 5% of the equity.
- A proven commitment to protecting investor funds.
- Pass our sponsor level Financial Viability due diligence.
Further Due Diligence on Sponsors:
Sponsors that pass our initial screening process are then subject to thorough due diligence, in adherence to the UK Data Protection Act, before being approved by our Investment Committee.
All investments pertain some level of risk. We attempt to identify key risk factors on both our sponsors and deals, in order to mitigate unnecessary risks on behalf of our investors. Wealth Migrate
[Wealth Migrate] therefore requires all potential sponsors to complete or furnish the below as a part of our due diligence:
- Background Checks – on both the business and its principals
- Business Verifications – on Official Government Registries and Bureaus
- Track Records – Spot audits to review the performance of past projects
- Financial Solvency – Signed off by a verified Auditor
- Reference Checks – Financial, legal, commercial, and investor based
- Senior Management’s experience & qualifications – Including CVs of their Acquisitions Teams & Investment Committee Members
- Business Model Review – Proof of previously successful projects & exits
- Corporate Governance – Verify that Annual Filings / Tax Submissions are all up to date
- Online Presence – In-depth web searches, social media, news, and online reviews
Management Team Experience – This is the main designation determinant. We ensure that each sponsor’s principals have the necessary qualifications and years of combined management experience in the deal-type area. We look for knowledgeable teams with strong leadership experience and a proven track record.
Age of Operations – Age of a specific company falls subordinate to management experience, as we believe the team behind a sponsor is the main driver of its success.
- Although we list companies that have been operating for less than 3 years, their management teams will still need a minimum of 20 years’ experience to be approved as a sponsor on our platform.
- Sponsors in the designation with lower operating ages therefore do not necessarily have a true start-up’s risk, since newly registered entities could still be backed by an established business model and an experienced management team that drives that new brand.
Assets under Management (AUM) – The more advanced designations have to meet the minimum set limits of Assets Under Management, while the lowest designation COULD meet its set minimum.
Supplementary Criteria – We realize that not everything is cookie cutter perfect in life. Where the above 3 criteria don’t overlap to fit a specific box, we assign a ranking to additional key factors. These ranked values are then summed and placed into a matrix to determine the final category for the related sponsor.
- We look for niche experts, not generalists. The less general, the higher the ranking.
- We look for sponsors who invest more of their own capital alongside other investors into the opportunities they offer. This ensures additional comfort in the quality of each deal that is made available. The more cash a sponsor invests into their projects, the higher their ranking.
- Accuracy of Projected Returns – During a new sponsor’s DD process, we perform random spot checks on 2 or 3 of their previous deals (case studies) to see how their business model was implemented and to evaluate the success rate of their deals and offerings. We also look at a few of their deal-reports to review the accuracy of their return estimations, compared against the actual returns of deals.