Royal Eagle COVE ™

 Royal Eagle COVE ™

 Royal Eagle COVE ™

Upon doing a Due Diligence trip in Panama on 2019 we were impressed with The coves used in Panama to protect the smaller work boats.  The backdrop of the massive high-rises and commercial buildings only magnified both the simplicity and complexity of such a roaring city.  It was at the moment that we created the philosophy of the COVE, a simple philosophy to protect the basic financial principles amongst the backdrop of a dynamic and complicated global financial system.  

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 Royal Eagle COVE ™ Four Basis Requirements

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Controlling Position

The Sponsor seeks the following attributes when committing to a real asset:

  • Senior Position
  • Controlled Lending Position
  • Floating Rate and/or adequate Preferred Rate
  • Special Purpose Vehicle (“SPV”): Royal Eagle invests in SPVs, not directly in companies, to hold equity, collaterals, off-take agreement, land, physical assets, and core collateral of project

Operational Expertise

The Sponsor understands the success of a project starts with success of experienced operators:

  • Fundamentally driven experts with decades of successful experience
  • Operation team in-line with financing perspective to control cost and maximize NOI
  • Globally focused teams domiciled in the country of operation and understand international capital markets and globally accepted expectations.
  • Experienced teams with low-turnover, team-oriented culture that shares in the success.

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Valuation

Disciplined investment approach process that focuses on consistent and strong cash flows. Deal-flow is commonly co-sponsored and underwritten with local bank partners, international investment bank and family offices. The valuation is captured and created by focusing on infrastructure and moated businesses.

A moated business exhibits the following characteristics:

  • Monopolistic Characteristics: High barriers of entry, reducing risk to investor
  • Regulated: Provides steady cash
  • Inelastic Demand: Demand is high in good and bad market conditions
  • High Capital Cost, Low Operating Cost: Creates steady and predictable cash flow
  • Insulated from Economic Downturns: Good for investors in short and long runs
  • Technology: Most infrastructure is less exposed to changing technology 
  • Inflation-Indexed Cash Flows: Natural hedge to inflation based on inelastic demand
  • Low Correlation with Equity Markets
  • Stable Cash Flow

The Sponsor underwrites each individual project on these various metrics and can maximize performance and re-risk a project by being selective and co-sponsoring deal flow.

Deal-flow is commonly co-sponsored and underwritten (additional due diligence) with local bank partners, international investment bank and family offices.

Exit Strategy

The Sponsor focuses on quality assets that provide strong and consistent cash flow to investors; however, Royal Eagle further demand that the asset has a clear and accessible exit strategies. The exit goal allows an investor to monetize and recapture their dollars.

Exit is largely catalyzed by fundamental metrics and consistent cash flow.

The discussion in controlling issues (Senior Position, strong preferred rate and SPV protection) de‐risk assets and develops them into favorable assets to be purchased by institutional and public markets.

Assets are privately held but the Sponsor adhere to strict compliance and strong financial metrics used to assess public bonds and investment grade ratings such as:

  • Debt/EBITDA ratio
  • Emphasis on Free Cash Flow or Enterprise Value to Debt and Leverage Points
  • Debt/Service
  • Sustainability of cash flow – Strengths of off‐takers and contracts

The Sponsor assesses each transaction individually; however, fundamentally the investment committee is deeply rooted in sponsoring enterprises with strong cash flows and solid operations that can increase valuation and most maximize shareholder value through optimal performance and exit