NPLs and co-investment strategies drive
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Wigan Acquisitions’ Patrick Wigan outlines why co-investment strategies, NPL writedowns, and ‘deleveraging for growth’ is an effective means to drive attractive returns for institutional investors and a boost to deal volumes.
Our company Wigan Acquisitions is a family office and private equity backed principal investment company specialising in Central and South Eastern European direct real estate co-investments, asset management and private equity fund-raising.
We see that the market is moving away from ‘blind co-mingled funds’ with institutional and private equity investors alike preferring direct line of sight to individual assets and portfolios matched to their key risk-return criteria. Through co-investing with likeminded equity partners offers relative speed to invest, greater control, stronger relations, flexibility to adapt to changing local markets and full transparency (including on fees) and direct alignment of interests. We remain committed to building a significant sized asset management platform across the CEE & SEE region without depending on short-term fee generation.
We believe that institutional investors are increasingly looking for new opportunities to extract value for their private equity funds and consider such a co-investment approach as an attractive alternative to typical fund structures as well as offering the chance to joint venture with other private equity investors and family offices as we typically partner with.
The fact that institutional-driven acquisitions have lagged behind in CEE can be at least partly attributed to regional-focused banks more effectively writing down non-performing loans over the last 12-18 months. According a recent conference hosted by PWC – in 2015 alone NPL portfolio transactions of approx. €6 billion face value were brought to the market. This represented an increase of 300% in comparison to 2014. By the end of 2016 the distressed loans volume in Austria and CEE is expected to reach €177 billion.
This ‘deleveraging for growth’ has helped restore liquidity to the market through more realistic priced loans and assets once again offering attractive return prospects relative to western European benchmarks. Coupled with the fact that many of the same banks are more actively lending again on a competitive basis has started to drive significant deal volume.
Should increasing levels of debt instruments therefore help us with pan-CEE acquisitions? Yes, of course, but more importantly we remain focused on direct real estate asset fundamentals matched to specific co-investment strategies of our principal co-investor partners. Priority strategies for us right now include high street retail assets in Prague, Vienna and Budapest; dominant retail centres in Austria, Croatia and Slovenia and building a student housing platform across the region in general.
Wigan Acquisitions has a straight talking and direct approach to sourcing attractive deals, effectively appraising, securing debt finance and offering full asset management capabilities.
Securing the best investments and offering value-add initiatives therefore remains the key; with increased leverage helping enhance but not defining our target returns.
If you are interested to learn more about our company and opportunities to co-invest across the CEE & SEE region, please contact us directly via our website www.wiganacq.com.
Patrick will be speaking on Day 2 of the 13th Annual Syndicated Loans CEE Conference – please follow the link for more details about the conference.
