A fund for loans to businesses in Poland, which specializes in investments in short-term, non-bank bridge loans backed by a first lien for real estate assets. The loans are extended to businesses in Poland and have fixed interest
About the investment opportunity
While approximately 90% of businesses in Poland are small and mid-size enterprises, the rate of rejected applications for external financing for businesses is higher than the European average, even though the rate of profitable companies is higher than average. The banks’ lack of flexibility, along with the lengthy bureaucratic process, has created a credit crunch for business. Lacking alternatives to the banks, borrowers are willing to pay high interest rates for financing, even when the real estate asset in their possession serves as a full collateral and should actually reduce the cost of credit.
Poland is the EU member showing the greatest growth, and it is considered a developed country with stable private consumption and numerous foreign investments in recent years. Poland has for some time been considered a business-friendly country, with a liberal macroeconomic policy and an annual growth rate of approximately 4%. Although it is a developed economy, many banks still refrain from financing the business sector, which leads to high cost of capital and creates opportunities for foreign investors. Extending credit is an area that requires a high level of expertise – in recent years, we at IBI Investment House have accrued a great deal of knowledge in this field, regarding our consumer credit operations alongside our real estate operations in the US.
Additional information about the fund
What’s special about the fund
The fund benefits from the interest received from the credit line it issues to a local underwriting company in Poland, which is controlled by IBI Investment House. The local underwriting company identifies short-term financing opportunities and extends credit backed by real estate collateral. All the assets and borrowers undergo strict due diligence. The fund makes it possible to invest in large-scale and highly diversified financing activity in Poland and offers fixed interest, shekel-denominated investment, without exposure to foreign currency and a reduced tax rate of 15% for fund investors. Amir Golan, CPA, who has managed IBI Investment House’s alternative debt funds for the past decade heads this operation.
How is the fund managed?
The fund receives applications to extend a loan from business partners, real estate agents/brokers in Poland. The borrowers are corporations/entrepreneurs who are interested in receiving immediate credit against real estate collateral to finance their business operations. After the fund receives an application to extend a loan, its credit team, lawyers, third-party real estate appraisers and an internal appraiser perform a thorough underwriting process for the loan. The fund examines the loan applications, with each loan being granted subject to the well-developed business plan for the strategy to use the funds and how they will be repaid.
Who oversees the fund?
Tzur Capital Management is the administrator of the fund in Israel. It calculates the fund assets, manages the register of partners (customers) and controls the movement of money in the fund. TMF Group is the trustee of the fund in Poland, and it performs control of the financial transactions in the company’s account in Poland and oversees the integrity of the loan documents received.