Club Investing for Professional Investors
An explanation of club investing with Deallocker.
Club deals
At Deallocker our mission is to democratise value-add property investing. In order to achieve this, we want to make the process not only transparent but simple and accessible. As a result, we’ve introduced a club deal feature, where professional investors can invest alongside other investors. This reduces risk for both parties.
By pooling resources with other like-minded investors in a Special Purpose Vehicle (SPV), you can participate in unique investment deals once reserved for large institutional investors. This approach is not only a standard practice in the industry but also a smart way to diversify your investment portfolio while sharing risks.
Club structure
Each SPV is a unique entity formed for the sole purpose of managing a specific investment project, allowing investors to pool resources with a select group of peers—typically no more than three to five. An SPV is typically a UK private limited company.
How Does the Club Work?
Indicative offer
Investors can make non-binding offers to the Deal Provider directly on the listing. This is essentially a preliminary expression of interest, giving the deal provider a gauge of investor sentiment without any financial commitment.
Formation
The deal provider, often with assistance from their legal experts, sets up the SPV specifically for the investment project. This ensures that all financial and legal responsibilities are neatly packaged into a single entity.
Investing
As an investor, you become part of the SPV either through equity shares (if equity investment) or through a loan agreement (if second charge / mezzanine finance). This means your investment goes directly into purchasing or developing a property project.
Completion
Once the property project is completed, any returns from selling or refinancing the assets are distributed back to investors. These returns could come in the form of capital gains or debt repayments, depending on your chosen investment method.
Key Points to Remember
Marketplace: Deallocker’s marketplace helps the discovery and evaluation of deals but does not participate in the clubbing process or act as an intermediary.
Investor Responsibility: The deal provider is responsible for the formation and management of the SPV. As an investor, it’s crucial to conduct your own due diligence and seek independent legal advice regarding your participation in any SPV.
Data Accuracy: The investment opportunities listed are based on data provided by deal providers. Deallocker does not verify this information, so always ensure the data's accuracy and relevance yourself.
Why Use an SPV?
Once the property project is completed, any returns from selling or refinancing the assets are distributed back to investors. These returns could come in the form of capital gains or debt repayments, depending on your chosen investment method.
Differences from Crowdfunding
Direct Investment vs. Pooled Funds: Crowdfunding often involves numerous small investors contributing to a collective fund, which then invests in various projects. In contrast, a club deal facilitates direct investments into property through SPVs, where investors negotiate terms directly with the deal provider, giving them greater control and clarity over the specific assets they are funding.
Professional Investors Only: Deallocker is exclusive to professional or high-net-worth investors as defined in the UK. This ensures that all participants have the requisite experience and financial capacity to engage in these sophisticated investment opportunities. More about investor qualifications here.
Legal and Financial Autonomy: We do not manage the SPV or handle any funds, legal contracts, or KYC processes. All legal and contractual matters are directly handled by the deal provider or their legal counsel off the platform. This hands-off approach emphasizes the role of Deallocker as purely a technology platform and marketplace rather than a mediator, allowing investors to maintain full autonomy and responsibility over their investments.
Join the Club!
At Deallocker, our goal is to make your investment journey as straightforward and profitable as possible. By understanding the Club process and the role of an SPV, you’re better equipped to make informed, confident investment decisions.
Ready to dive into your next property venture? Let’s get started!