Our vision is to become the partner of choice to SMEs and be the conduit for creating investment solutions that offer attractive returns and incorporates sustainable strategies for our investors. The fund believes in a 360 approach whereby the partners, employees, industries and communities we participate can be financially and socially fruitful.
Royal Eagle Capital Partners commonly encounter family owned businesses that in need of partial liquidity, family governance, succession planning and legacy planning. Family business have the opportunity to create liquidity events; while, still owning majority shares of the company and the future direction of their family company.
Royal Eagle Capital Partners is able to assess companies from a Sell-Side and Buy-Side Representation. Commonly we will find our competitive advantage is working with Special Situations that involve experience in dealing with multiple equity and credit parties.
Royal Eagle Capital Partners Is well versed in the capital stack and being able to find capital needs for various themes such as Manager-Buy-Outs, Restructuring, Liquidity, Expansion and Project Finance, Acquisitions and Growth.
Royal Eagle Capital Partners understands the driver behind any company is increasing valuation; while, maintaining company philosophy and mission. We work to help companies keep their mission as we find strategic ways to increase valuation and strategic partners.
Royal Eagle Capital Partners Works with onshore and offshore banking lending sources that rang from SBA loan packaging to private credit funds.
Royal Eagle Capital Partners Understands how to prepare a company from data room to capital presentations.
Our mission is to democratize access to capital markets to small and medium enterprises [SMEs] to create a real financial and social impact.
Our vision is to become their partner of choice to be the catalyst in creating investment solutions with attractive returns incorporating sustainable strategies for our partners, employees, the industries and communities we participate in.
In 2015, the United Nations General Assembly created a collection of Sustainable Development Goals (SDGs), or the 2030 Agenda for Sustainable Development, that provides a “blueprint to achieve a better and more sustainable future for all.”
Per the United Nations, the SDG’s “are a call for action by all the countries, poor, rich, and middle-income, to promote prosperity while protecting the planet.
The 17 SDGs recognized that ending poverty must go hand in hand with strategies that build economic growth and address a range of social needs including education, health, social protection, and job opportunities while tackling climate change and environmental protection.
Investing and operating sustainable portfolio companies in the energy, financial inclusion, housing, education, and health, we will create a direct impact in the least on ten of the seventeen United Nations Sustainable Development Goals [SDG's], which are the following
ESG #1: End of poverty in all forms everywhere.
ESG #3: Ensure healthy lives and promote well-being in all ages.
ESG #4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
ESG #5: Achieve gender equality and empower all women and girls.
ESG# 7: Ensure access to affordable, reliable, sustainable and modern energy.
ESG #8: Promote inclusive and sustainable economic growth, employment and decent work for all.
ESG #9: Build resilient infrastructure, promote sustainable industrialization, and foster innovation.
ESG #10: Reduce inequality within and among countries.
ESG #11: Make cities inclusive, safe, resilient and sustainable.
ESG #13: Take urgent action to combat climate change and its impact.
While globally, Small and Middle Enterprises [SMEs] are generally underserved by banks and more traditional financial institutions, the SMEs in developing economies have left behind even more.
After the 2008 global financial crisis, in general, banks worldwide reduced their lending capacity, focusing primarily on more traditional cash flow lending.
SMEs in more advanced economies benefited from an influx of alternative investment funding, non-traditional lenders and innovative funding strategies like crowdfunding, to fill the gap, the financing gap for SMEs in developing economies widened even further.
Royal Eagle believes that SME finance market is a growth market. We believe that SMEs are likely to offer attractive investment terms in the form of current cash yield, preferred and/or deferred interest, equity participation and warrants, and more attractive security and collateral features with a stricter loan covenant.
Additionally, as compared to larger companies, SMEs often have simpler capital structures and decision-makers, sometimes because of the market constraints to obtain capital, they carry less debt, making the due diligence, structuring, and negotiation process dynamic and flexible.
Royal Eagle believes that private capital, deployed at scale, can create a systematic, transformative impact in SME’s exponential growth and therefore, in their communities.
The following data shows the date about some of the factors affecting SME's problems to access funding and how Royal Eagle's strategic financial solutions approach can help to solve.
A) Improving Small and Medium Enterprises [SMEs] access to finance through innovative capital under a low-carbon economy
According to the World Bank*, Small and Medium Enterprises mall and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries.
SMEs account for most businesses worldwide and are important contributors to job creation and global economic development. They represent about 90% of businesses and more than 50% of employment worldwide.
Formal SMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included.
The World Bank estimates, 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world.
In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs. However, access to finance is a key constraint to SME growth, it is the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries.
SMEs are less likely to be able to obtain bank loans than large firms; instead, they rely on internal funds, or cash from friends and family, to launch and initially run their enterprises.
The International Finance Corporation (IFC) estimates that 65 million firms, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year, which is equivalent to 1.4 times the current level of the global MSME lending.
East Asia And Pacific accounts for the largest share (46%) of the total global finance gap and is followed by Latin America and the Caribbean (23%) and Europe and Central Asia (15%).
The gap volume varies considerably from region to region. Latin America and the Caribbean and the Middle East and North Africa regions have the highest proportion of the finance gap compared to potential demand, measured at 87% and 88%, respectively.
About half of formal SMEs don’t have access to formal credit. The financing gap is even larger when micro and informal enterprises are considered.
In one hand, the US Economy, one of the largest economies in the world, is driven by small and middle-market operating companies and startup to support entrepreneurs with access to capital through crowdfunding platforms up to USD$1.07MM; USD$20MM to USD$50MM through REG-A known by Pre-IPO; unlimited funding through REG-D; IPO, credit-back lending or Funds sponsored by alternative investment vehicles and several lending options of capital through Banks, Credit Unions and other sources with clear rules for marketing sources, regulated by the state and federal laws, overseen by the Security Exchange Commission.
All those legal frameworks and funding sources are not commonly found in emerging markets.
Based on Royal Eagle experience creating equity and debt financing structures for clients and operating companies, working under a sophisticated market like the USA, Canada and Norway, we have identified a gap between domestic versus international capital funding access for SMEs and Entrepreneurs.
This gap is the very catalyst that creates divided international markets and stark discrepancies in business operators and their resources.
Over the years, we have seen business operators that satisfy capital requirements and covenants from an international capacity there is inherited understanding that the source of capital is both expensive and controlling.
This creates an environment over collateralized lending opportunities, which, also lend offering equity stakes within the company.
Margin spreads and profit margins have narrowed in North America and European markets. Often in Latin American environments solid operators, that are regulated and controlled through governance and specific legal structures, understand the capital sources will cost a “hurdle rate” or expensive coupon with an equity position in the company that can range as high as 49%.
Corporate governance allows for a capital partner to both controls the management of the company and offer investors a high coupon with capital appreciation opportunity.
B) Implementing Environmental, Social and Governance [ESG] policies in SME's and capital access
Around the world, Governments, Private Companies and Financial Institutions are facing the challenge of balancing the increasing demands of energy, food, housing, water, health, and education from a growing population while mitigating climate change.
Regarding ESG, investors are facing the challenge to identify companies that offers potential for strong financial returns while also demonstrating a commitment to sustainable business practices and positive impact.
Sustainability can be integrated and monitored in the following capacities
C) Low active capital markets in LATAM versus what we have in the USA
Low to non-New-IPO’s issuance: the capital markets in Latin America are not as dynamic as in the USA. The market cap of Brazil, Mexico, Colombia, and Panama combined is only 5% of the USA Market Cap with only 570 companies listed in total versus 4,397 companies listed in the USA.
The last IPO in Mexico was performed in 2017. The Bolsa Mexicana de Valores (BMV) is promoting new instruments and legal frameworks to increase the volume and the market cap of the stock exchange.
In Panama, there is only one REIT registered on the Bolsa de Valores de Panama, where the market presents acquisition opportunities, but the stock market is illiquid. New players with new ideas and solutions are needed.
There is an initiative to perform joint efforts to bring Guatemala, El Salvador Honduras, Panama and Costa Rica for issuance of equity and debt structures under one uniform law that potentially could increase the market share and dynamism of the capital markets in Central America.
We are planning to use and raise funds through domestic financial instruments to leverage our position and increase our purchase position and offer local private, institutional and pension funds investors alternative international investment products under their local capital markets.