A NEW ISA-eligible mini-bond has been launched by Ocea Group, a property development firm aiming to address the UK’s housing shortage by converting commercial property into affordable homes.
Ocea Group has partnered with non-listed corporate bonds specialist UK Crowdfunds on the new property-backed Innovative Finance ISA, which offers target annual returns of 6.85 per cent over its five-year lifetime, paid quarterly.
It is looking to raise up to £5m from investors for the mini-bond and expects to make total revenues of £29.8m and profits of £25m over the period before returning the capital raised to investors.
The mini-bond is backed by UK property and there is a debenture over all the assets of Ocea Group. An independent security trustee has been appointed to act in the interest of bondholders.
“We are very excited about offering investors the opportunity to gain exposure to the UK property market and benefit from the success that Ocea Group has achieved in the past three years,” said Justine Curtis, co-founder and director of Ocea Group.
“As with any investment, returns are not guaranteed, but our aim is not only to provide investors with a stable tax-free income from their investment in the ISA eligible Ocea Group mini-bond, but to help address the chronic UK housing shortage by providing affordable and desirable housing.”
The launch comes just days after Treasury select committee chair Nicky Morgan asked the Financial Conduct Authority to investigate whether mini-bonds should be regulated.
“There have been many successful and high profile mini-bonds over the years that have provided investors with high rates of return, but there are also a number that have failed, so it is very important that such investments provide the necessary investor protection,” added Curtis.
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“Ocea Group is committed to use our successful track record and provide a consistent return for investors, whilst protecting them with measures such as an independent security trustee to act on behalf of bondholders in the unlikely event that Ocea Group should default.”
Ocea Group has purchased or developed 19 projects to date, with a total gross development value in excess of £100m.
Its institutional investors include Aldermore Bank and United Trust Bank.