Jad Wakil, Executive Director of the Mouflon Investment Fund, outlines the Fund’s investment profile, strategy and growth trajectory in an interview with Forbes Cyprus.
The Fund has been active in Cyprus since 2017, managing a diversified portfolio of real-estate assets. Over this period, it has successfully navigated both the COVID-19 downturn and the inflationary shock that followed, which had a significant impact on market interest rates.
Wakil says the Fund’s resilience reflects disciplined management and targeted risk-mitigation measures designed to limit the impact of each crisis as it emerged.
Despite the challenging environment, Mouflon continued to generate stable income from its properties while investing in the enhancement of its portfolio — a strategy that has supported a steady increase in its net asset value.
What is your fund’s investment profile and strategy? Which sectors or markets do you primarily target?
Mouflon Investment Fund currently operates as an open-ended private equity fund, and as such we can implement numerous strategies within one umbrella.
Our main focus is on asset-backed strategies, which have the advantage of minimising downside risks for investors through the creation of pooled portfolios. We have been investing in Cyprus and, more recently, in Greece in residential, commercial, and hospitality projects. We have been implementing a revenue-generating and value-add strategy, whereby the objective is to provide an income stream for investors with an upside on exit, and more recently introduced a turnaround strategy focused on acquisition, refurbishing, and sale of assets with a shorter timeline for investment.
We are also developing an offering in the shipping industry based on a similar strategy of asset pooling and revenue generation, as well as a hospitality focused portfolio in Greece and Cyprus.
How has your presence and activity in Cyprus evolved over the past years, and what are the key factors behind your success?
Our Fund has been operating in Cyprus since 2017, managing a portfolio of real estate assets. We successfully navigated the COVID crisis and the inflation crisis, which highly impacted interest rates in the market, by applying sound management and risk mitigation practices, focusing on minimising the specific impact of each crisis when it hit. Throughout this period, the Fund continued to generate income from its properties, while investing in the improvement of the portfolio, which led to continuous increases in net asset values. This was further realised through disposal of assets in the past two years at or above valuations, thus enabling the Fund to realise profits upon exit despite the volatility and price shocks of the period between 2021 and 2024.
How do you assess Cyprus’s position today as a destination for the establishment and operation of investment funds?
In terms of legislation, Cyprus does offer an attractive regime that is constantly being updated to meet both EU directives and objectives, as well as covering gaps and needs in the market. Cyprus does benefit from competitive pricing versus more established destination, but still suffers from legacy problems including reputational risks, as well as the small size of the overall ecosystem which doesn’t yet allow it to become a hub for fund incorporation.
What are the main trends you observe in the Cypriot and European investment funds market?
The realisation at the European level that the fragmentation of capital markets in general is hindering growth, at a time when public debt is rising and GDP growth is stagnating, will hopefully create more drive towards integration. This can be beneficial for jurisdictions with established ecosystems to compete for the creation of more internationally domiciled and managed funds.
On a Cypriot level, there needs to be more focus for local fund to benefit from local deposit, which are quite high and for a large part unproductive, by creating strategies which can funnel such a large pool of capital – for the size of Cyprus – into the local economy, driving further growth and ultimately job creation.
Our upcoming funding rounds will emphasis the need for diversification of capital allocation within the local economy and tap into the local deposits which have seen their value highly degraded by inflation. We believe that there is a need for an asset-backed investment opportunity which can provide investors with both an income stream and inflation beating performance, thus preserving and growing their capital, and which is a strategy which we have successfully implemented with foreign capital in the past seven years.
How do international geopolitical developments influence investment decisions and fund management?
The tech sector in Cyprus has generally benefited from the presence of both Ukrainian and Russian tech companies which have relocated to Cyprus following the war in their countries, which had a ripple effect on the entire ecosystem, both encouraging other foreign tech companies to come to Cyprus as well as boosting local startup scene. This example showcases the effect or geopolitics on the local economy, which can be either positive or negative.
On the flip side, a jurisdiction and economy as small as Cyprus does not have a strong influence against geopolitical and other macro developments, and as such local managers need to have a robust risk management strategy for their investments to navigate adverse development and reach the next cycle. This is what Mouflon Fund managed to do, through a period that saw one of the biggest falls in economic activity in a very short period followed by an increase in interest rates and changing attitudes about office work, by actively implementing actions that protected its assets from the downsides, leading to eventual recovery and profits upon exit.
How do you see Cyprus’s role as a regional investment funds hub evolving in the coming years?
Moving forward, Cyprus should press its advantage as a relatively stable EU country with an advantageous legal structure and geographic proximity to troubled areas to attract more managers to use Cyprus as a domicile. Our experience in the past 8 years has cemented our belief that Cyprus has a competitive edge, and we are confident that the continuous incremental improvement will lead the asset management industry in Cyprus to mature into a globally competitive player.