Seeking to capitalize on our recent merger with prominent EB-5 consulting firm Wright Johnson and accelerate our growing EB-5 practice, Baker Tilly Capital’s EB-5 team spent the first quarter of 2017 traveling to both emerging and established EB-5 markets. The efforts were led by Baker Tilly Capital’s leadership team of Michael Fitzpatrick, Aaron Goforth and Kevin Wright.
The team met with strategic partners, including leaders from local Baker Tilly International member firms, and potential investors in several countries including China, India, Vietnam, Turkey, Russia, Mexico and the United Arab Emirates (UAE).
While China continues to lead the EB-5 market, it is under increasing pressure due to government currency controls and delays caused by retrogression. Currency controls in the PRC will soon tighten. Beginning July 1, 2017, banks and other financial institutions in China will have to report all domestic and overseas cash transactions of more than 50,000 Yuan (approximately $7,200 USD). Financial institutions in China will also be required to disclose foreign transfers made by individuals of $10,000 USD or more. During our recent trip to China, we met with resources that may lead to an acceptable pathway to help investors fund their EB-5 investment through Baker Tilly Capital.
Additionally, prolonged processing times for I-526 petitions and retrogression delays are causing many investors to consider alternative EB-5 investment strategies. Baker Tilly Capital is currently assisting Chinese agents in cases where a broker-dealer is required to facilitate an EB-5 investment where the parents in China are gifting the investment funds to their child attending a university in the U.S. Finally, with 23 affiliate accounting offices across China, we are developing a pre-immigration tax planning service to help investors structure their tax planning before receiving a green card to maximize their potential tax savings.
With waiting times extending longer than five years and the impending currency controls coming on July 1, 2017, we have placed an emphasis on expanding our source of investors outside of the Chinese market, to include Vietnam, Turkey, India, UAE, Russia, Mexico and Canada.
Vietnam is one of the fastest growing EB-5 markets, which is shaping up consistent with the Chinese distribution model with migration agents holding seminars. However the market is not fully mature and Baker Tilly Capital is pursuing relationships with multiple migration agencies by educating a wide array of migration agents and immigration lawyers about EB-5. Baker Tilly Capital conducted seminars and investor meetings during the first quarter throughout the country in conjunction with Baker Tilly Vietnam.
The Turkish market is currently experiencing a surge of EB-5 activity as the wealthy population is concerned over recently passed referendums that give unprecedented power to their current leader. Baker Tilly Turkey is actively involved in EB-5 and Baker Tilly Capital is developing a series of seminars and organizing meetings with their clients. In March, Baker Tilly hosted educational seminars at the SoHo House in Istanbul and the Hilton Bosphorus. We look forward to hosting quarterly seminars in Turkey and expect to work with a growing number of investors in the foreseeable future.
The UAE also holds considerable EB-5 promise. After multiple trips in the first quarter of 2017, we have established relationships with several partners in the UAE that are actively working with us to build the EB-5 market. While there is significant uncertainty in the market owing to the current political climate, we have found strong demand for EB-5 among the Indian population residing in the UAE and we expect a steady flow of Indian investors from the country.
After visiting and speaking with investors in Mumbai, Aminabad, New Delhi and Chennai, we have compiled several interesting observations about the potential EB-5 market in India. A majority of investors indicate a preference to make a direct investment in a project of their own rather than a passive investment in a larger Regional Center project. We believe and can demonstrate that many of their concerns can be overcome and that the market is growing rapidly. We have noticed that the larger Regional Center operators have made a significant investment in these markets and have a strong presence. Additionally, niche projects that offer an equity investment with some potential for upside and a low number of investors are very attractive to a segment of the Indian market.
We believe that Russia and CIS countries hold strong potential for EB-5. We hosted events throughout the region and are developing relationships with numerous immigration consultants. These consultants indicated there’s a strong market for the immigration-based investments that they offer for Malta, Cyprus and other programs, and they perceive demand for EB-5 as well. We are finalizing negotiations to add several independent contractors to support our efforts in these markets.
Closer to home, we continue to develop the domestic investor market among persons currently in the U.S. in a non-immigrant status who wish to avail themselves of the relatively expedient route to legal permanent residence offered by EB-5. We are cultivating the immigrant investor market in our neighboring countries, Canada and Mexico. Our efforts in Mexico are a part of our larger Latin America initiative which will see our professionals spending significant amounts of time in the region this year.
Domestically, Baker Tilly’s EB-5 consulting practice has provided its various services to over 70 clients in the first quarter of 2017. With the successful integration of Wright Johnson’s EB-5 consulting practice, Baker Tilly Capital now has the ability to offer a wide range of EB-5 services to its clients, including:
- TEA designations
- Economic analysis
- EB-5 compliant business plans
- Broker dealer compliance and distribution