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Deal 5: Orion Head of Investment Benas Poderis on Private Bond Investment in Germany

Deal 5: Orion Head of Investment Benas Poderis on Private Bond Investment in Germany

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On June 28, 2022, CEE Legal Matters reported that Motieka & Audzevicius, working with Osborne Clarke, had advised the Orion Private Equity Debt Fund I on its EUR 7 million acquisition of secured mezzanine bonds issued by Austrian real estate developer Soini Asset to finance its real estate projects in Germany. CEE In-House Matters spoke with Benas Poderis, Head of Investment Management Department at the Orion Private Equity Debt Fund I to learn more about the deal.

CEEIHM: To start, tell us a bit about the Orion Fund.

Poderis: Orion Asset Management is one of the leading Lithuanian asset management companies, specializing in real estate, private debt, and private equity fields. Our flagship private debt fund is a blended strategy private debt fund in terms of debt instruments and business sectors. Generally, we are looking for 12-15% IRR generating private debt opportunities and combining both senior and junior debt instruments in real estate development projects, M&A, mezzanine for growth, etc. From its inception almost 4 years ago, the fund has already made more than 30 investments from EUR 1 million to EUR 7 million in the education, e-commerce, IT, high tech, agriculture, finance, and real estate sectors.

CEEIHM: As reported, the fund recently invested EUR 7 million in secured mezzanine bonds issued by Austrian real estate developer Soini Asset. What made this a particularly attractive investment for you?

Poderis: To make a long story short, it was just our deal by all parameters similar to what we do often in Lithuania (in terms of a good reputation sponsor, clear structure, covenants, expected return, security, high institutional level underlying real estate asset, etc.), except that in Germany, where we have never done anything before. That’s why we were a bit extra cautious thinking that it is too good to be true, maybe having a wrong assumption that private debt deals in Western Europe should usually have worse metrics than we have in the Baltics. This time it had more or less the same metrics, but geographically it was interesting to do something abroad and diversify our portfolio from the Baltics.

CEEIHM: What was the most challenging aspect of the investment from a legal perspective?

Poderis: Probably timing, but to be honest we were surprised ourselves with how smooth and easy the process was. All parties were dedicated professionals, negotiations were quick, and proposals by all parties from both the legal and financial perspectives were very reasonable. The documentation itself was very clear and easy to digest. We were kidding that we were not sure if it was due to good people on both sides or if it was German law making it easy.

CEEIHM: What was Motieka & Audzevicius' mandate exactly?

Poderis: We asked them to find a german law firm to work in a deal together and to coordinate all the processes and communication from our side with the German law advisers (Osborne Clarke) and the legal advisers of the issuer of bonds. They were very involved in the process, making revisions to draft documents as in the financing documentation there are plenty of aspects that are universal, and having a legal team knowing our business was very useful.

CEEIHM: And why did you choose them as your advisors on this deal?

Poderis: We have made several deals together before,  we know what to expect from them, they know that we are very pragmatic and straightforward with our processes, and they already know our appetite for risk and investment strategy – all making it easy to work together.

 

Originally reported by CEE In-House Matters.

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