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Preeti Sinha

What position should EB-5 investors have in the capital stack?

Answers

Philip Cohen
January 06, 2016 10:00 AM  Philip Cohen

There is no hard and fast rule here. Investors and agents prefer to see investors in the first position, however this is not always possible and everyone knows that. If it is possible, it helps from the marketing perspective, but a strong project with a strong team and feasibility study can lessen this need. Additionally if a bank is lending money to the project, most investors and agents expect the bank to demand first position. Just be careful of placing the developer/ founder and other independent investors ahead of EB-5 investors. The lower down the EB-5 investor is in the stack, the harder it is to sell the deal. Capital preservation is an important consideration.

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