Among the recently registered AIFs in the CSSF’s AIF Identifiers dataset is “Yeldo Varedo S.C. SP”, a fund registered on behalf of Yeldo, an Italian/Swiss investment manager focusing on originating real estate deals. The firm has made use of Luxembourg structures such as the reserved alternative investment fund (Raif) since its inception.
Investment Officer recently took a deep dive into the existing data for Luxembourg alternative investment funds.
Yeldo has specialised in providing professional investors with single, stand-alone deals, “with a pipeline of single deals that they could co-invest in,” explained Lorenzo Belloni, Chief Investment Officer at Yeldo Group. The firm’s team of real estate professionals selects off-market deals to offer risk-adjusted returns. This was the firm’s initial business model, he explained.
The firm also offers portfolios of senior or mezzanine positions (preferred equity or debt), with real estate collateral.
Very strong network
Yeldo has a very strong network on the origination side. Belloni stated that Yeldo doesn’t take full equity positions, but prefers to co-invest in projects alongside an established equity sponsor.
“We have started working in Switzerland but are now expanding also in Italy,” he said, before mentioning that they invest even further afield. For example, he mentioned projects in Spain and Monaco. The firm is now expanding its pipeline to countries such as Portugal and Germany.
Luxembourg-registered “Yeldo Varedo S.C. SP”, is one of these stand-alone deals. Specifically, it serves to finance the transformation of a logistics plot being converted from a former industrial use.
CSSF-regulated
A Yeldo firm called ‘Yeldo GP’ acts as the general partner of the SCSp, which has an “AIFM light” license and is regulated by the CSSF.
Yeldo has also recently launched an open-ended reserved alternative investment fund (Raif) managed by Pure Capital S.A, a Luxembourg-based AIFM. This fund takes stakes in Yeldo’s deal-by-deal origination. Yeldo considers the fund their “flagship vehicle.”
Yeldo is headquartered in Luxembourg but has most of its investments in Italy, where it is moving more and more of its operations. “The market is quite large for investment,” said Yeldo Chief Operating Officer Eraldo Cavalli, before explaining that because “the leadership is fully Italian, so maybe there’s a question of network as well.”
Recent addition
Cavalli pointed out that his firm was “quite new to the market” – having been around for five years.
The firm got its start using Luxembourg’s reserved alternative investment funds and securitisation markets, he explained.
Cavalli recalled that the Varedo deal “was strongly oversubscribed” and amounted to a 6 or 7 million euro deal. “It was quite small for our standards,” he said. “Typically, we’re in the 10 to 15 range.”
€1 billion in deals
Since 2019, Yeldo has set up 36 financed deals worth about 1 billion euros, with a 14.6% internal rate of return and a 0% default rate.
In the current difficult macroeconomic context, Yeldo has chosen to focus on real estate private debt, an asset class the firm claims is “living its ‘Golden Age’.”
Cavalli described logistics as “a very interesting asset class”, and pointed out that the Varedo deal was a bridge financing deal. The deal had characteristics that made it quite appealing to investors, including a pre-sale agreement that meant the finished plot was already sold to a final buyer. It also had a very short duration, with a compelling expected return.
Good mix of investors
The investors in the deal were “a good mix,” Cavalli said. He explained that they included a couple of institutional investors who put in more than 2 million euros each. “And then we have typically our investor pool is made of family offices, asset managers, wealth managers and sometimes also private investors,” he said.
These investors “are all professional investors, so they can acquire instruments via their bank,” he explained, adding that they acquire certificates which mirror the fund.
Yeldo is a technological platform at heart, explained Cavalli. He explained that investors can invest in Varedo through the firm’s website.
Fans of democratisation
“The democratisation of access is basically what we are on,” said Cavalli. “That’s what we do as a company and that’s what we believe in, too.”
He said this led them to start a crowdfunding platform for retail investors last year. This operates in parallel to the services for professional investors, such as Varedo. As a Luxembourg holding company, Yeldo hasn’t had experience with other European domiciles.
“We started where we are based,” said Cavalli.” Explaining his firm has “no issue” with Luxembourg, he said, “I will say it’s pretty convenient, and it’s well-recognised in terms of reputation.”