What's in it for ICP?
This is a question we are frequently asked. The simple answer is that ICP is not a conventional company – it does not seek to make a profit. It is simply a vehicle via which groups of investors can collaborate on projects in which they have a common interest.
For these collaborations (syndicates) to be effective, we need a legal entity through which we can operate, hence ICP. Our focus is entirely on producing returns for syndicate members. Every one of our 109 shareholders is a member of one or more syndicates and expects to get a return via that membership (we don't pay dividends - ICP has no profit to distribute), but all syndicate members, whether or not they are shareholders, are treated equally.
Our members fall generally into two categories – those who join a Management Syndicate to collaborate in the resolution of problems associated with an existing development and those who participate in an Investment Syndicate when an opportunity arises. Such opportunities frequently emerge from the needs of a Management Syndicate, for example to invest in the completion of an unfinished development. In such an instance, Management Syndicate members will be able to take delivery of the unit they originally bought and Investment Syndicate members will benefit from the sale of vacant units. In fact, various refinements of this model are usually possible – for example, Management Syndicate members may not have the funds to complete their original purchase and can instead participate in the sale of vacant units so that they get a return from their original investment; alternatively, they may choose to ‘downsize' to a lower-cost unit.
This approach means that Management Syndicate members are not usually obliged to invest further funds to restore value to a project whilst we can meet our aim of providing new investment opportunities to our members in general. Nevertheless, Management Syndicate members have a preferential option (i.e. ‘first refusal') to join a related Investment Syndicate if they so wish.
In addition to syndicates which are related to specific developments, there are some common services which are needed by many different syndicates, such as construction and site management. Over time, we have developed these capabilities and deliver them as required to multiple syndicates and their members via a subsidiary Property Services company, Incise bg. We also have an asset management subsidiary, Balchik Developments. These wholly-owned subsidiaries are in fact financed by Investment Syndicates and profits which are earned are distributed to members of those syndicates. By utilising our own staff to deliver these services, we can ensure that they are delivered professionally and efficiently, but there is no obligation for Management Syndicates to engage them – policy is always determined democratically by syndicate members.
Whilst ICP does not seek to make a profit it must of course cover its costs - the challenge is in generating the necessary income. Management Syndicate members are usually aiming to recover funds (or at least acquire a property) rather than make further investments. Our policy is therefore to recoup our costs from the proceeds of the syndicate's activities – we don't ask members to pay expenses in advance. Costs incurred are built in to an Investment Syndicate proposition and will only be repaid when funds are recovered. This is a pragmatic approach – without it, there would be few new investment opportunities.
Each project is different and the options available to syndicate members will vary, but in each case we will, via member agreement, devise a strategy which is designed to deliver value to all those involved.