DOWNING Crowd has launched two £10m crowd bonds, offering initial interest rates of three per cent per year.
The Bagnall Energy Regular Access Bond and the Pulford Trading Regular Access Bond are both available on the platform now, and are both eligible for tax-free investing through Downing Crowd’s Innovative Finance ISA (IFISA).
The new regular access crowd bonds have a 10-year maturity. Unlike most bonds, investors will be able to access their money before the maturation date, given an appropriate period of notice. The bonds will be released in £1m tranches.
“Our new regular access bonds fill a neglected gap in the investments market,” said Downing partner and head of crowdfunding, Julia Groves.
“We would never suggest that this type of bond is directly comparable with cash savings as it is higher risk. However, it could prove an attractive option for those ‘extra pots of money’ that people often start building to meet certain types of financial goals, so long as they understand the investment and are willing to take on the additional risk.
“And the option to hold the bonds in our IFISA wrapper means investors’ capital and interest will be sheltered from tax too. As a result, we expect the first tranches of both bonds to sell out quickly.”
The Bagnall Energy Regular Access Bond will be used to fund Bagnall Energy, a UK renewable energy generation and storage company. Bagnall Energy has a current portfolio of more than 30 operational projects across the UK renewable energy sector. Although the bond is not secured against the company’s assets, it is limited to borrowing no more than 20 per cent of its net assets, which helps reduce risk for investors.
The Pulford Trading Regular Access Bond will lend money to Pulford Trading, a company with a range of asset-backed sectors including hotels, leisure centres, data centres and care homes.
“One of the really positive benefits of crowdfunding is that it has the potential to make finance more inclusive by reaching customers that the traditional financial services industry can’t (or won’t),” added Groves. “That’s essentially what our regular access bonds are all about and we believe it will provide a unique and much needed opportunity for many investors.”
The first tranches for both bonds are now open and will close on 31 July 2017 at 9am.