In the wake of Portugal’s Golden Visa reforms, Pagani Capital has launched a private equity vehicle that invests via convertible bonds. This article explains how convertible bond funds work, why they suit real estate projects and how they can qualify investors for EU residency while offering downside protection and upside potential.
A convertible bond is a fixed-income instrument that can convert into equity under certain conditions. In the context of real estate development, it provides project sponsors with flexible financing and gives investors exposure to a project’s future equity upside while retaining the security of bond coupons and principal. For Golden Visa investors, such bonds can be packaged into a fund structure, meeting the €500 k minimum investment requirement and the five-year holding period stipulated by Portuguese law.
Traditional Golden Visa funds often concentrate in a narrow Portuguese equity market, limiting diversification. By contrast, convertible bond funds allow the fund manager to support high-quality development projects, such as hospitality resorts or residential complexes, while maintaining institutional-grade security. Coupons provide a stable income stream, and conversion rights offer participation in capital appreciation. If the project fails to meet pre-agreed performance milestones, the bonds remain debt instruments, protecting investors’ capital.
Furthermore, convertible bonds can be structured to align with international investor expectations: they are typically issued under Portuguese law with independent trustees and depositary banks, ensuring transparency and compliance. For investors from the USA, Brazil and Turkey, this structure delivers a familiar risk/return profile similar to corporate bond funds while offering EU residency as a bonus.
Under Portuguese regulations, investment funds must allocate at least 60 % of their capital to assets based in Portugal and be managed by accredited asset managers. Convertible bond funds meet these criteria and provide a route to residency that is less sensitive to property market cycles than direct real estate purchases. Pagani Capital’s fund channels capital into eco-resort developments and urban regeneration projects, helping to meet Portugal’s housing and tourism priorities. The fund’s hybrid nature appeals to wealth managers, family offices and immigration advisors because it balances capital preservation with upside potential.
Readers seeking a comparison of fund types should be directed to Open vs Closed Funds and Portugal’s Place in International Portfolios. For those interested in sustainability considerations for such projects, Sustainability and ESG Trends in Global Real Estate: Implications for Investors provides an ESG perspective.
