Today, real estate (RE) development company Eika is launching a EUR 5 million bond issue. The two-year bonds have already attracted the attention of both retail and large investors, such as Gerovės valdymas, one of the oldest asset management companies in Lithuania. The company’s employees and persons associated with the Eika group of companies also intend to invest in the bonds – their The invested amount can reach up to 0.5 million euros.
“Only after the first news about the distribution of our bonds appeared, we received various inquiries, both from the business community and from private individuals – potential bond buyers. The planned investment amount range is very wide – from one thousand to several hundred thousand euros. The bond issue parameters are the same for everyone and do not depend on the amount invested – this principle of equality was important to us,” says Indrė Dargytė, member of the board of Eika Asset Management.
The bonds will be distributed by Šiaulių bankas from October 26 to November 11, and the value of one bond will be EUR 1,000. The planned annual interest rate will be from 4.5 to 5 percent, and the exact interest rate will be determined by auction – market participants, future investors, will be able to offer them by filling out bond purchase applications.
A multifamily office plans to purchase part of the bonds
A large asset manager, UAB FPĮ “Gerovės valdymas”, the oldest independent licensed multi-family office (Eika) is also planning to invest in the Eika bond issue.. multi-family office) in Lithuania.
“As a multi-family office, we invest in various financial instruments and are constantly looking for new, interesting investments with the right risk-return ratio. We were one of the first to start actively investing in the private debt market in Lithuania, and currently we are looking for safer, short-term bonds linked to real estate,” says Vilius Oškeliūnas, wealth manager at financial advisory firm Gerovės valdymas.
According to the financial expert, “Eika” is one of the leaders in the Lithuanian real estate market, so after getting acquainted with the company’s results and business plans, it was decided to contribute with investments to the implementation of these plans. The form of bonds chosen by “Eika”, when they are issued by the parent company, in our opinion, provides security and clarity for investors. From the initial indications, we see that our clients intend to redeem a significant part of this bond issue,” says V. Oškeliūnas.
“We have already held negotiations with representatives of “Gerovės valdymo” regarding the possibility of offering an investment product that meets the needs of their clients. We are pleased that we managed to attract the interest of clients of one of the oldest multi-family offices operating in Lithuania,” says I. Dargytė.
Suggests not waiting for the last day
According to Domas Klimavičius, Head of the Investment Services Group of the Markets and Treasury Department of Šiaulių bankas, bond issues are becoming increasingly popular as a counterweight to bank loans.
“We have been helping companies borrow money by issuing bonds for more than 6 years. We carefully select issuers that are acceptable to us, so in all cases the issues are fully distributed. Bond issues related to the real estate market are distributed regularly. The real estate housing market is well-known and acceptable to investors, so we constantly receive a lot of interest,” says the investment expert.
In the auction organized by Šiaulių bankas, priority will be given to investors who first sent and paid for bond acquisition applications during the distribution period, as well as those who indicated the lowest interest rate, i.e. 4.5 percent. D. Klimavičius advises investors who have decided not to wait until the last day, because in case of excess demand, the bonds will be acquired by investors who submitted applications the earliest and chose the lowest yield.
Company employees also plan to invest
In addition to institutional and retail investors, the company’s employees also plan to invest in Eika bonds. According to I. Dargytė, the amount invested by employees and parties related to the Eika group may reach up to 0.5 million euros. “This shows the employees’ trust in the company, their willingness to lend to their company, which is issuing bonds on the market for the first time in its history,” I. Dargytė is pleased.
The company plans to allocate the raised funds to the development of future projects of the Eika group of companies, and primarily to the community living apartments (Eika) planned for Šv. Stepono Street.. co-living) project.
Consolidated revenue of the real estate development and construction group “Eika”
Last year, Eika’s sales reached 53.3 million euros, i.e. 11.5 percent more than in 2018. In 2019, Eika sold a record number of apartments – 450. The company also completed the development of the 49 million euros multi-functional complex Live Square in July 2019, which consists of the Live Square business center with a shopping gallery and a roof terrace, the Hilton Garden Inn hotel and residential apartments.
Information about the bond distribution: old.eika.lt/obligacijos/