Building wealth through private investment doesn’t need to be boring. While stability is essential for your peace of mind, the range of exempt market products available to choose from keeps you engaged and continuously discovering new possibilities. The Prestige Hospitality Opportunity Fund - I offers an excellent example of this, with reliable returns generated by buying, operating and improving, and then realizing a profit on quality, branded hotels.
Claiming Your Share of Hospitality
If you’ve ever given thought to going into the hospitality industry, this is the right time to claim your share. The Prestige Hospitality Opportunity Fund - I targets well-known hotels catering to business travellers, and focuses on Canadian assets in major centres. Brands in the spotlight include names like Ramada, Marriott, Sheraton and some non-branded hotels are eligible for conversion through remodelling and upgrading.
After holding ownership, implementing improvements and operating for 3 to 5 years, the assets are evaluated and sold, and the profits and invested capital are distributed to the investors.
A Great Alternative Option
Real estate assets offer investors in North America a sound alternative investment vehicle, one with a low level of risk although it’s slightly more illiquid than other vehicles. This is refreshing, however, for an investor who prefers a slower pace, and the intrinsic value of the properties themselves offset much of the risk factor.
The hospitality industry is in a unique position right now, too, with 80 percent of family-owned hotels lacking formal succession plans. This makes them easy targets for buy-out, and statistics from CIBC show 30 percent of private hotel owners will shed control of their businesses by 2020 in favour of taking retirement. In addition, the high price point for purchasing a hotel creates a market where sellers are in the majority. This opens up an excellent opportunity for serious buyers such as the management of this fund.
Benefits of Investing in Prestige I Fund
These factors make the Prestige fund an excellent opportunity for investors looking for a tangible investment in exempt market products. If you’re ready to expand your investment portfolio and are looking into exempt market products consider DIAM Capital Markets Inc. as your Exempt Market Dealer.
If you want to invest your money for long-term gain, you may believe the stock market and mutual funds provide the only opportunity for you. But private investment opportunities may be available to you if you know where to look. An exempt market dealer can help unlock ways for you to invest outside of the publicly traded markets, and create paths to increase your wealth as a result.
What Is Private Investment?
Private investment works by connecting you to companies that are not publicly traded. Rather than purchasing stocks on the public stock market, you invest in private companies that are not listed on any specific exchange and usually are locked in for a minimum period of time. You need to do your homework, because these investments, typically do not allow you to buy and sell whenever you wish, therefore you must have patience and be willing to hold your investment if it’s the right opportunity for you.
The flip side is that, when you invest in the private capital markets, the potential gains you can receive can be much greater than typically found in public markets. Like investing in the public markets, you are either buying equity, or lending via debt in generally smaller companies whose growth may be much more aggressive than larger, more established firms that can be found on the public stock exchanges.
Working with an Exempt Market Dealer
Of course, finding the right private investments requires market understanding and research. For most potential investors, this places greater demands on time and knowledge than you may have available. This is where working with an exempt market dealer comes into play. You need a partner who understands the investment landscape and has the background knowledge of these private companies in which you might invest, and can apply your financial needs and expectations to finding the right investment for you.
An exempt market dealer is regulated by one of the provincial regulators such as the Ontario Securities Commission, not unlike any of the larger investment dealers or the banks. Further, it faces regulation and is held by these regulators to high proficiency and financial stability requirements for licensing. Your exempt market dealer is bound by the same duties as public dealers in being required to thoroughly understand its clients investment needs before suggesting the appropriate opportunity. In short, these dealers come through a careful government vetting process before they can go to work for you.
As a result, partnering with the appropriate exempt market dealer is critical in ensuring that you are getting the right advice that fits with your financial needs. Investing in private companies demands you understand not only how those companies operate, but how their operation and financial picture fit into the overall market economy. An exempt market dealer can direct you to opportunities that fit both your financial goals and your personal appetite for risk in your investments.
Partnering with DIAM Capital Markets
DIAM is a private market investment boutique that focuses on serving the needs of private investors in Canada. As an experienced exempt market dealer, they deliver not only the private market expertise you need, but the personal attention that helps you identify investment opportunities tailored to you. Their expert investment analysts and dealing representatives can help you reach your investment goals in the private investment market.
When it comes to choosing a partner in private investment you need to know that you’re in good hands. You need to know that the person on the other side of the table is not only capable of finding great investment opportunities, but also that they’ll look out for you and protect your interests in the long run.
Enter Andrea Jones, DIAM’s Chief Compliance Officer, and one of the reasons that DIAM’s clients are in great hands. With over 16 years in the financial sector, she’s experienced, knowledgeable and exactly the person you want handling the administration of your accounts as well as ensuring that the investments are suitable for your portfolio. Find out what she had to share about her approach to compliance and why she thinks that private investment is the way of the future.
What is your role as the Chief Compliance
One of my fundamental responsibilities is to make sure that every investment is suitable for the client, and doing this means looking at the whole picture. What are their assets, what is their income, do they have debt, and if so how much, do they have a family and other financial responsibilities?
For example, if you have a client that’s single and making 100 000 a year, and another client with the same income that’s married and has children, the first client is going to have a lot more disposable income and therefore potentially a greater risk tolerance. Part of my job is looking at these details, looking at the individual client’s profile and making sure that the investment is a suitable investment for that profile.
It’s surprising that every investment is tracked this closely, is this a compliance requirement, or something unique about DIAM’s approach to compliance?
It’s all tracked. Every single trade. It needs to be, we can’t randomly track trades. There’s a regulatory requirement that every trade and every transaction is supervised in every shape and form. However, one of the strengths I have is that I’m also a licensed dealing representative, so I come from a background where I used to be the one sitting in front of the investor asking the tough questions such as “what are your assets, and what is your income?” I intimately know what that situation is like and I know how that feels for them.
That is one of the things I bring to compliance that’s different, as many compliance officers have never been licensed on that side. They don’t know what it’s like to sit in front of an investor and have them be uncomfortable telling you about their financial and personal situation.
At DIAM, it’s not just about getting the information [from clients] but about building a relationship, putting it into perspective. It’s about being able to explain how you are going to go about doing these things. This is something we really emphasize in our dealer rep training, we want to bring that human side back into it, while also making sure they’re properly trained and have all the tools they need to do their job effectively and efficiently.
How else does this emphasis on dealer rep training determine DIAM’s approach to compliance?
Ultimately the goal and role of compliance is protection. It’s to protect the investor, the advisor and the firm. We’re in a market where things are constantly changing, and my role is to provide that protection by making sure that the advisor, the firm and the investor all have an awareness of those changing rules and regulations. At the end of the day we want to make sure that everyone does everything they’re supposed to do and within the guidelines set out by the regulators. The quality of people that we have is a direct reflection of us. Our philosophy is we’re only as good as our last trade.
Is there anything else you’d want to tell the readers?
The exempt market is the way of the future. There’s a shift in the way the markets are going and more and more people are coming to the exempt side of the market and we take their money seriously and their trust seriously and for us that’s one of the cornerstones of our business.
What do you think is the reason for this shift to Private Market and Private Investment?
The public market is often driven by emotion, whereas the exempt market is based on the reality. It takes the fundamentals into account and the illiquidity of the exempt market is part of this.
People fear the illiquidity, but oftentimes it provides stability since investors can’t cash in their investment on a whim, forcing them to stick with their original goal, so it’s not necessarily a bad thing. It also makes the investments act as a forced savings. You can’t take your money out whenever you want, so it helps keep you on track.
New regulations regarding private investments have made them more accessible to investors. Previously, these investments could only be bought by institutions and individuals with a very high net worth. Now, the rules have changed and smaller investors can take advantage of these unique opportunities. If you are considering getting into private investments, there are 3 important things you need to know:
1) What is the role of the Exempt Market Leader?
Private investments are made available through an Exempt Market Dealer (EMD). This is a company that holds a license for distribution of investment securities which aren't qualified by a prospectus. The securities are exempt from the requirement to have a prospectus as per the rules and regulations of the jurisdiction where an Exempt Market Dealer is registered to operate.
2) How are private capital investments and publicly traded stocks different?
The investments are referred to as private capital investments because unlike public stocks and securities, they aren't publicly traded on an exchange. The companies that raise capital via an exchange listing cannot issue securities without filing a prospectus which is very expensive and drives up the cost of capital significantly.
Private capital investments are different because they can be purchased with an exemption from the requirement to file a prospectus. This gives investors access to an alternative to traditional investments.
3) Are private capital investments less risky than traditional public investments?
All investments have varying levels of risk and this includes private capital. However, they perform differently than public stocks because they have limited resale rights. This lack of liquidity is also one of the main risks of private capital; investors may have to hold their investment for a number of years before they can sell their investment but many private companies are now putting in place redemption options for investors so they can sell before the investment matures.
At the same time, lack of liquidity can be an advantage because it forces the investor to take a longer-term view and not be influenced by the fluctuations of the stock and bond markets. It also provides a most effective way to diversify a portfolio. In this market, good returns are based on the ability of a company to maximize returns without being at the mercy of investor sentiment on any given day like the public markets.
Still have questions about private investment? Contact DIAM Capital Markets Inc. We’re an experienced Exempt Market Dealer committed to providing our clients with superior customer service, and up-to-date information on all our exempt market products. We’re sure that our team of professionals will help you make the right investment decisions for growing your wealth and diversifying your portfolio.
So what are you waiting for? Call us at (905) 497-9339 and get started today!
Kontrol Energy is one of the exciting exempt market products offered by DIAM Capital Markets. This energy supplier based in Mississauga, Ontario has a mission of acquiring and/or investing in established companies in the energy sector including companies involved in energy conservation, energy storage and renewable energy.
Unique Investment Opportunity in Exempt Market Products
Outstanding performance, organic growth and carefully considered mergers and acquisitions make Kontrol Energy a very exciting private investment opportunity. The company is currently offering eligible investors an opportunity to invest in an 8% debenture with upside participation in the form of equity as the company grows and becomes more profitable. The 3-year debentures will pay 8% per annum with 100 Common Shares attached to every $1,000 debenture providing for equity upside participation.
Kontrol Energy will reward investors with stable income and growth over an investment term of three years, through strategic acquisitions of profitable businesses with positive cash flow in the energy efficiency sector.
Kontrol Energy debentures
A debenture is a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond to secure capital.
Debentures have no collateral. Bond buyers generally purchase debentures based on the belief that the bond issuer is unlikely to default on the repayment.
Investors in Kontrol Energy debentures will be extending a loan to the company and in return, they will give the amount invested back with projected annual returns of 8% with maturity of the debenture over a term of three years.
These terms are contained in a Debenture Deed. This document carries the details of the amount invested, interest payable and repayment of the principal amount.
Advantages of Investing in Kontrol Energy
1) Diversification potential
This alternative investment in energy has great diversification potential. This is because Kontrol Energy will be buying into stable companies that provide excellent cash flow potential. In some cases, Kontrol Energy will be implementing their own management teams to utilize efficiencies and drive up profit margins and cut excess costs. In Addition, due to their focus on private companies, the returns will not be driven by market forces that cause volatility as is the case with public investments. Also, there will always be demand for energy, traditional or alternative sources, as the population and economy grow.
2) Cushion against inflation
This investment could provide a stable return and help cushion the costs of inflation because as the cost of living increases and the demand for energy grows, households and businesses will always be seeking alternative choices to control the cost of it.
3) New frontiers
With the completed and planned Kontrol Energy mergers and acquisitions, this investment will be diversified as the company will be invested in a pool of businesses, thus reducing the risk of a single investment.
4) Higher returns
Like most alternative investments and exempt market products, this investment has the potential for higher returns.
The risk of investing in Kontrol Energy
It is important that investors understand the potential risks and potential returns. The good news is that Kontrol Energy is an investment fund that invests in a variety of energy related businesses, thus offering investors true diversification. Investors need to be aware though that private investments like this can be less liquid when compared to public investments and the holding period in this case is a minimum of 3 years.
The risk is also reduced for investors with the addition of equity in the form of common shares allowing for upside capital gains potential along with the income from the debenture.
Trusted Exempt Market Dealer
To take advantage of this promising investment opportunity, you need an Exempt Market Dealer with a solid background with Exempt Market Products.
The Exempt Market Dealer you need to manage your Kontrol Energy investments is DIAM Capital Markets Inc. DIAM is an Exempt Market Dealer offering investment products and advice in the areas of Alberta, Ontario and British Columbia.
When it comes to Private investments, you need to make sure that the Exempt Market Dealer you choose will be a good fit for you. Here are five questions that you should always ask your Exempt Market Dealer to determine if they’ll be the right private investment partner for you.
1) What are the risks of a particular investment?
You need to understand the particular risk attached to individual investments and how an Exempt Market Dealer plans to mitigate the risks. You should see the entire picture of both potential returns and possible loss. The potential returns should compensate you for the risk you take with an investment.
2) Who will manage my investment?
Your private capital investment will be managed by the Exempt Market Dealer. It is important that you choose dealers with proven experience. Look carefully into their accomplishments, background and the professional histories of those running the company and your money.
3) How is the EMD compensated?
You should know how the EMD you choose is compensated for the products they sell. This will let you know what to expect in terms of returns as well as giving you insight into the investments that the EMD will pursue on your behalf.
4) Liquidity - how long will my money be tied up in the private investment?
Typically, investments in the private capital markets are locked in for 3 to 5 years. Be sure to ask your advisor if there are options to potentially sell your investment before the 3-5 year period expires.
5) How will the capital be used?
It is also important to understand how a company you invest in plans to utilize the capital raised through private investors. This will tell you if there is planned asset coverage and if expected revenue will cover investor distributions.
Investments into hard assets such as land and buildings are less risky than investment put into speculative ventures such as research or companies entering into a completely new market. You should also know if a company is raising capital from other sources and if these other sources have priority over yours.
The leading Exempt Market Dealer
Your research will show you that DIAM Capital Markets are an EMD that private investors can trust. We serve investors in Alberta, Ontario and British Columbia. Our team of skilled and experienced Private Wealth Advisors provides expert advice and a selection of investment products.
We aim to give our clients the best investment choices so they can make informed decisions that will enable them to achieve their objectives. We align the interests of our clients with appropriate risk/return trade-offs.
Contact DIAM today and we'll get you started on a long and profitable journey with private capital investments.