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Due Diligence Process - INVESTMENT HIGHLIGHTS

Panelists: RUPY CHEEMA, DAWN LURIE, GREGORY WHITE
Moderator: KURT REUSS

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Reid Thomas
NES Financial

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Kurt Reuss
Primary Capital

EB5 Diligence highlights twenty-three (23) deal terms in each due diligence report. Unfortunately, deal terms are what some people define as a due diligence checklist. As an example, earlier today I spoke with Reid Thomas (NES Financial) who’s currently in China and he told me that in speaking with local agents, he asked what they thought about due diligence. He said that from the agent’s point of view there seems to be three (3) major areas that due diligence covers.

1. Experience of the issuer and the EB5 regional center, and what deals they’ve previously completed.

2. The capital stack such as how much of the project financing will come from EB-5 investors and how much is coming from developer equity.

3. Conditions put in place to protect the EB5 investor, such as escrow conditions and collateral.

And when I talk about deal highlights included in our reports, I’m talking about some of the following:

  • The type of investment
  • The offering type; whether it is a Reg S or Reg D offering
  • The total project costs and the EB-5 portion
  • Are there any minimum raise requirements before the EB-5 investment will be accepted?
  • The investment amount / The admin fee?
  • The job cushion?
  • Is there escrow?
  • Are they using a broker-dealer?
  • Is there a fund administrator?
  • Is there independence between the manager and the JCE?

The highlights our EB5 Diligence reports also delve further into the regional center and the issuer’s experience, such as how many deals they've done, how many i526 or i829 petitions they’ve had approved.

But what I want to emphasize is that there is quite a lot more to due diligence than the highlights!