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Peer2Peer Finance News | December 14, 2018

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Downing extends bond size after prospectus rule change

Downing extends bond size after prospectus rule change
Tim Evershed

CROWD bond platform Downing Crowd has taken advantage of the new higher prospectus limit to extend the size of its most popular bond.

EU prospectus rules mandated companies to issue a prospectus for debt- or equity-based crowdfunding worth more than €5m (£4.4m) and get it approved by the Financial Conduct Authority (FCA). But the threshold for exemption was increased to €8m in July this year.

Downing has now increased the capacity of its Reserve Power Bond to £7m from £4.25m.

Read more: Downing launches fixed-term property bond

It is the platform’s most popular bond, having attracted 600 investors.

“The underlying principle of a prospectus – to provide detail to help investors’ understanding of the offer – is a good one,” said Julia Groves (pictured), partner at Downing LLP and head of Downing Crowd.

Read more: Downing Crowd launches £3.95m biogas bond

“However, the reality is more often the total opposite, with the length and complexity of prospectuses actually making it harder for investors to build this understanding.

“It’s still absolutely crucial for investment firms to demonstrate their due diligence and present all the key facts and risks to investors but this change from the FCA creates an opportunity to present this in a much more concise way, that’s likely to be better understood and more widely read.”

Read more: Downing Crowd launches two £10m crowd bonds