OurCrowd expands into income products with top-tier debt fund
Exclusive, time-limited access to oversubscribed €2.5B Arrow Global fund previously only available to institutional investors
- Income-generating debt fund with quarterly distributions following investment period; previous investments in similar assets returned 18% average gross IRR >10 years with loss ratio below 1.5%
- Fund pursues unique strategy of investing primarily in non-performing real estate loans secured by underlying property assets
- Highly diversified with average loan size of €4M; invests across 5 European countries
- Exclusive access for OurCrowd investors to fund previously limited to institutions investing €20M or more; oversubscribed round closes end of January
- Target-rich environment as banks seek to reduce balance sheet exposure to non-performing loans trading at discount during period of economic stress
- Arrow Global is top-tier investor, asset manager; experienced investment team with 3,000+ deals executed
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with your Investor Relations representative
Dear Josb,
OurCrowd is expanding its offerings to investors with exclusive access to an income-generating debt product from Arrow Global, a leading European investor and asset manager. Arrow's previous investments in similar assets returned a high historical IRR with a very low loss rate. Participation in Arrow funds has previously only been available to institutions investing at least €20M.
Arrow Global ACO II is a €2.5B fund that pursues a unique strategy of investing primarily in non-performing real estate loans secured by underlying property assets. OurCrowd is investing in Arrow Global ACO II. The details in this email are based on information received from, and verified solely by, the company.
This exclusive opportunity is time sensitive. The fund has closed €1.9B and is oversubscribed, with a final closing expected January 31st.
New OurCrowd Investment Product
OurCrowd is expanding the range of investment products offered to our members. This private debt product, which offers quarterly income to investors, is just one of several new types of opportunities that will be available on the OurCrowd platform in 2023.
This new product gives investors an attractive risk-adjusted returns profile, income yield and lower volatility, with quarterly distributions following the investment period.
High Returns, Low Loss Ratio
Arrow Global ACO II is the second fund from Arrow Global, one of Europe's leading private credit managers. Arrow purchases and resolves non-performing loans from its network of local lenders in five European countries.
Arrow's previous investment in similar assets, mostly from Arrow's own balance sheet, yielded a historical 18% average gross IRR over 10 years with a loss rate below 1.5%. Arrow has invested €7.9B in more than 3,000 deals since 2010.
ACO II had a first close of €1.3B in August, 2022 and has closed €1.9B as of end December 2022. As of Q3, 2022, ACO Fund I with a 2020 vintage had total realizations of €635M running at 1.5X underwrite value. This represents a deal level IRR of 19.4% and a gross IRR on drawn capital of 24%.
The Opportunity
Current market conditions in Europe, including a looming energy crisis and rising inflation, are creating a perfect storm for alternative lenders able to source loans to venture-backed companies with primary assets as collateral.
The cold economic climate is buffeting banks and financial institutions in Europe, creating a target-rich environment that Arrow Global is well-placed to mine through its network of relationships. Lenders are eager to reduce their balance sheet exposure to non-core banking assets and non-performing loans trading at a discount during this period of economic stress.
Arrow Global has more than $70B of assets under management in the UK, Ireland, Portugal, Italy and the Netherlands. Through its deep knowledge of these local markets, Arrow is able to select small, off-market deals that lenders are seeking to unload, and bundle them into a specialized structured debt fund. Over 90% of the fund's portfolio is either fully or partially serviced on Arrow's own platforms, which provides important insight into the performance of the assets.
Loans average about €4M each and are highly diversified across Arrow's five countries of operation and multiple sectors. Loans are backed by primary asset collateral, mostly real estate. The fund will make quarterly capital calls and has an estimated three-year draw down on committed capital.
Access to such funds is usually limited to major investors writing checks of €20M or more. OurCrowd is able to offer investors the chance to participate in ACO II at a minimum investment of $250K, with capital calls. The initial capital call at closing will be 7%.
The Team
Arrow Global distinguishes itself from other institutional funds in the market by acting as a vertically integrated asset manager with its own servicing platform as well as an investment platform. Arrow has 18 fully owned servicing platforms and ~2,500 employees operating in its five European geographies. The firm enjoys strong local client relationships and a significant level of local knowledge, leading to superior asset origination and underwriting capability across the target geographies. This represents a distinct and impressive moat that is difficult for new entrants to challenge or recreate.
Arrow's deep bench of professional managers has extensive experience on over 3,000 deals. CEO Zach Lewy has over 23 years of executive experience in NPL investment management and asset servicing. Lewy was the Founder and Executive Director of 7C Ltd., acquired in 2002 by Vertex (NASDAQ: VRTX), where he served as President, North America. John Calvao, Managing Principal and Co-Head of Fund, is the former CEO of Zenith Service S.p.A., and former CEO of Whitestar Asset Solutions.
Fund investors will also benefit from Arrow Global's 47-person central investment team and the Sourcing and Servicing Platforms' team of 98 in-country investment experts.
This opportunity is oversubscribed and time sensitive. OurCrowd's investor allocation is available until January 31st.
Meet the CEO
Watch an OurCrowd investor briefing with John Calvao, Managing Principal and Co-Head of Fund, and learn more about Arrow Global.
Can't make the webinar? Register and we will send you a recording of the call.
The Arrow Global Solution
Arrow Global distinguishes itself from other institutional funds in the market by acting as a vertically integrated asset manager with its own servicing platform as well as an investment platform. Arrow has built its credit servicing platform by acquiring market-leading credit-servicing businesses occupying at least a top-three position within geographies that have both a high NPL ratio and a high propensity for the local banks to sell non-performing and non-core assets. Arrow, therefore, possesses strong local client relationships and a significant level of local knowledge, leading to superior asset origination and underwriting capability across the target geographies.
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