SA’s wealthy have been taken aback by recent indications that there may be future changes to the SA Reserve Bank’s focus on protecting the value of the currency. This, on top of the recession, and the credit ratings downgrades, presents a challenging outlook for investors in South Africa.
This is the conclusion provided by Marc J. Sharpe of LCR Capital Partners, a specialist private equity firm that offers South Africans the opportunity to obtain a US green card through investment.
LCR, based in the United States, were in South Africa for the third time this year, as increasing negative sentiment locally drives interest in obtaining permanent residency in America – and ultimately American citizenship.
“Investing in EB-5 is not primarily about investing for financial return. The investment objective is to attain a green card, for yourself and your family. However, with currency depreciation continuing in South Africa, we’re seeing many investors looking into the EB-5 visa option with the primary goal of attaining a green card, but also aware that it is an “offshore” investment of sorts.
The current minimum investment amount is $500,000, and the funds are generally ‘locked up’ for a period of five years. If you had made this investment five years ago, in July 2012, the rand amount required would have been approximately R4,035,000 (R8.07 to the dollar). If your $500,000 was returned to you today, it would be worth around R6,585,000 (R13.17 to the dollar). That’s a return of almost 13% per annum in simple interest terms.
“Given the depreciation of the rand over the last five years, and future prospects for the currency not looking very promising, investors are feeling more comfortable moving their money abroad – and if they can get a foreign passport at the same time, that’s even better,” says Sharpe.
“We met 30 qualified candidates during our trip in June, and have seen a big increase in interest this year,” says Sharpe.
In 2014, there were only 18 applicants in total for this visa from South Africa, according to United States Citizenship and Immigration Services. In 2015, that went up to 40, and the industry is expecting to see a significant increase for 2016/17. These numbers are lagging actual demand by two years, due to the length of the application process, so the actual number of investors in recent years is likely to be much higher.
“The people we’ve met are generally families with children, who are selling properties, businesses, farms, and considering the EB-5 visa to provide better prospects for their children in America.