EB-5 fund administrator sells amid push to resurrect program

National /
Apr.April 03, 2020 03:30 PM
Michael Halloran
Michael Halloran

One of the country’s largest EB-5 and Opportunity Zone fund administrators will be acquired for at least $40 million amid a push to change EB-5 rules to boost the economy.

San Jose, California-based NES Financial on Thursday agreed to be acquired by JTC PLC, a provider of fund, corporate and private client services. Combined, the funds will service $130 billion in assets, according to a news release.

NES Financial has been a significant player in the Opportunity Zone and EB-5 space. It provides administrative services to private equity shops, debt funds and real estate firms who invest in the federal real estate programs.

“In the midst of the COVID-19 pandemic, our services are needed more than ever,” said Michael Halloran, chairman and CEO of NES Financial in a statement. “The U.S. EB-5 program has historically provided a capital lifeline in downturns. And as more people face sudden unemployment, the Opportunity Zones initiative and EB-5 investor program will continue to provide jobs to distressed communities across the country.”

NES Financial, headed by Michael Halloran and Tom Steipp, will continue to operate under its current brand in the U.S. market. The deal is expected to close at the end of April. If it hits certain financial targets, the deal could be worth as much as $116 million.

NES Financial also provides 1031 tax-deferred exchange services for private equity, commercial real estate and corporate clients. NES Financial had revenues of $13.2 million in 2019, according to a release from JTC PLC, which is based in the tax haven of Jersey in the British Isles.

The federal EB-5 program allows foreign investors the ability to get a green card in exchange for investment in U.S. businesses. The federal government could revamp the program by increasing the number of visas and lowering the minimum investment amount after waning demand from investors, according to published reports. Congress did not include EB-5 in its $2 trillion stimulus package, but the federal visa program could be included in later stimuluses, according to industry experts.

The Opportunity Zone program was tucked into President Trump’s 2017 tax plan and provided investors and real estate developers the ability to gain tax advantages for investing in one of the 8,700 designated “Opportunity Zones” across the country. The program was wildly popular within the real estate industry, but developers have struggled to make Opportunity Zone projects pencil out.


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