Retail Charity Bonds
A new issuing platform to raise loan finance for charities through listed retail eligible bonds.
Allia Retail Charity Bonds enable charities to raise between £10 and £50 million of unsecured loan finance through bonds listed on London Stock Exchange.
There is strong demand from retail investors for bonds which pay a fixed income, can be held in a tax efficient way and offer the flexibility to buy and sell the bonds before maturity. There are also many investors who want to invest in organisations that create social benefit.
Since its launch in 2010, London Stock Exchange’s Order book for Retail Bonds (a trading platform for retail investors) has helped corporate issuers to tap into this new source of funding, raising around £4.5 billion with bond sizes generally ranging between £50 million and £300 million. The Retail Charity Bonds platform now makes it affordable for charities with strong credit worth to raise smaller amounts through the retail bond market.
Key features of Retail Charity Bonds
- A new source of loan finance for established UK charities with strong credit worth seeking to borrow between £10 and £50 million
- Particularly aimed at charities seeking to further their mission by acquiring capital assets, investing in facilities or financing existing assets more efficiently
- A simple and transparent structure to access the retail bond market at affordable transaction costs
- Providing 5-10 year loans with the option to extend for a further 2 years (subject to an interest rate penalty) if the charity is unable to repay in full on the expected maturity date.
- Loans are unsecured with a relatively light covenant structure
- Established distribution channels both to institutional investors and to retail investors through authorised distributors
- An opportunity for the charity to raise their profile and engage with a new audience of investors
Please note that Allia cannot advise you on the most appropriate way to raise finance for your organisation. Make sure you compare interest rate fees and incidental costs over the full term of the loan.
Golden Lane Housing raised £11 million in 8 days
Golden Lane Housing is a leading national charity providing housing for people with a learning disability. It wanted to buy over 30 properties to house more than 100 people and it was also interested in refinancing its existing loans at a lower rate of interest. In July 2014 they became the first charity to raise funds through a retail charity bond. The bond raised £11 million, closing heavily oversubscribed after less than two weeks. Less than one year on and many of the new homes have been purchased and new tenants have moved in.
Alastair Graham, Director of Golden Lane Housing said “The retail charity bond enabled us to reach mainstream investors. We could access a far bigger market and raise the finance more cheaply.”
To start a conversation about raising finance through Retail Charity Bonds, please contact us at firstname.lastname@example.org