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“Cyprus should lead — not follow — in finance” – Amathus Capital

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“For a long time, Cyprus has followed the lead of other financial centres; now, there is a unique opportunity to become more of a frontrunner through the growth of its fund management industry” notes Yanna Loizou, head of Portfolio Management at the Limassol-based investment fund Amathus Capital.

“But we have to avoid quick fixes – our economy has been too dependent on them, particularly in the past two years,” Loizou told the Cyprus Mail in an interview. “Where the private sector has been able to drive change and build new business, Cyprus has been successful.”

“The fund industry, supported by a framework of up-to-date legislation, is helping to establish a sustainable leadership in financial services. We have a well-established talent pool, and we are tax efficient. This is the kind of thing Cyprus needs to harness to become a full-service financial hub,” she says.

Amathus Capital could be the poster child for that leadership. Licenced in April 2020 by CySEC, the alternative investment fund focuses on real estate in Greater London – one of the highest value property markets. The fund has £65 million in assets under management.

“We have about 40 investors, nearly all from Cyprus and our portfolio focuses on smaller assets in Greater London which have less competition. Currently about 70 per cent of our portfolio is invested in buy-to-let properties — but in the next 24 months, the fund’s target is to increase its investment in development assets (from about 30 per cent to 40-50 per cent), while slightly increasing its investment in commercial properties (from 15 per cent to 20-25 per cent),” explains Nicholas Papadopoulos, general counsel & compliance officer designate, who also spoke to us on Wednesday.

A move in that direction will enable the fund to target an internal rate of return (IRR) of 12 per cent, Loizou pointed out – historically, the return on buy-to-let is much lower than the return on development assets.

The fund is also seeking to expand its group of investors, and to increase its work with institutional investors in Cyprus. “There is a large pool of high-net-worth investors in Cyprus – we see little need to look abroad,” Papadopoulos continued.

Brexit should have no impact on the fund, which has no UK-based investors, but which can continue to invest in British real estate without any regulatory issue arising, Loizou explains.

It’s a strategy that wins praise from industry leaders. “Given that Amathus Capital is already established, with an existing portfolio, strong local relationships and a deep pipeline – that gives them a strong base to push on from in the market,” comments Paul Nearchou, an expert in international real estate who also serves as non-executive director at the firm.

“Our expectation is an increase in small-cap opportunities (for both development and rental assets) given continued market uncertainty,” he adds.

Cypriots working with Cypriots

Part of the fund’s strength comes from its long history of Cypriots working with Cypriots.

Since the 1980s, CEO Tassos Televantides and Managing Director Victor Papadopoulos worked with a small group of local investors setting up companies (Special Purpose Vehicles) to invest in London real estate.

Televantides and Papadopoulos identified lucrative opportunities and worked with investors to choose targets.

In 2018, thanks to the progressive changes in Cyprus fund legislation, it became clear that moving into an alternative investment fund made sense for the group – it provided tax advantages and a unified pool of investment to work from.

“Obtaining a licence took far longer than we expected,” complains Loizou, who was brought in with two other team members to set up the fund. “That would be a procedure to be improved, if we are to compete with countries such as Luxembourg.”

The fund offers the significant advantage of providing a return on investment right from the start, Loizou says. “Most funds start off with large amounts of cash and then go through an investment period of 1-3 years before beginning to generate yield – this is called the J-curve. Our fund has been fully deployed since its first close and as a result we have eliminated any J-curve effect.”

It’s also significant that the fund’s long standing relationships with high quality property managers and its selection of investments has meant that it hasn’t had any loss due to Covid-19. “Our portfolio has maintained its value from rental yield performance with occupancy close to 100 per cent, right through this year,” Papadopoulos notes.

Loizou has moved to Limassol from London to help manage the fund. “There’s been a lot of negativity about Cyprus lately, but we believe it’s a great location to operate and manage a fund. We don’t see why we shouldn’t do business from here,” she says.

 

 

 

 

 

 

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