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LendInvest 5.25% bond offer closes on Friday

Peer-to-peer lender says its five-year retail bond will generate returns from bridging loans to property investors and developers.

LendInvest 5.25% bond offer closes on Friday

Peer-to-peer lending group LendInvest is offering investors exposure to the property market and a 5.25% return from through a retail bond.

Retail bonds are a special type of corporate bond that allow companies to raise money from individual investors. Like other bonds, they are essentially IOUs, which aim to return your money at a set date – known as a maturity date. They also pay an interest rate (or coupon), typically twice yearly.

Retail bonds are listed on the London Stock Exchange’s Order book for Retail Bonds (Orb) through which they can be bought and sold just like shares.

The LendInvest bond is offering a return of 5.25% with a maturity date of 2022, the first time a bond has been listed on Orb paying over 5% since April 2016. Neither has there been a retail bond listed on Orb that has a maturity of five years since Orb opened in 2010.

The bond can be held in ISAs and self-invested personal pensions (Sipps) and the minimum investment is £2,000. It can be purchased through a number of investment platforms including, Hargreaves Lansdown, AJ Bell Securities, Alliance Trust Savings, Barclays Bank, Equiniti Financial Services, Interactive Investor, Redmayne Bentley, and Syndicate Room.

Investors have until midday on 4 August to invest in the bonds.

The money raised from the bonds will be channelled through LendInvest's mortgage division which assesses borrowers and then makes loans to small businesses and professional individuals. Those loans will in turn be used to buy, build or refurbish property.

LendInvest matches investors with demand for bridging loans from property investors who are planning to turnaround a property quickly. Since its launch in 2008 to 31 March this year, the lender has loaned £811 million to property investors. Total annual lending now reaches £286 million.

Christian Faes, chief executive of LendINvest, said the retail bond offers ‘compelling returns’ and access to ‘a much sought after asset class’ in a world of low interest rates.

‘As we continue to scale the business, we’re increasingly looking to diversify our funding model and expand our capacity to lend to underserved borrowers, as well as to create new entry points to an attractive asset class that suits a broader range of investors seeking competitive risk-adjusted returns,’ he said.

LendInvest has maintained that it is offering a solution to the UK’s housing shortage by providing financing to smaller developers and individuals, which banks are reluctant to lend to.

Rod Lockhard, managing director of LendInvest Capital, said the bond came ‘at a critical time when demand in the UK’s residential property market continues to outstrip supply’.

‘The retrenchment of traditional lenders from short-term or small-scale property financing has created a fundamental lack of capital for professional property investors, but also an opportunity for competitive alternative lenders like LendInvest,’ he said.



3 comments so far. Why not have your say?

Mahendra Patel

Aug 01, 2017 at 15:21

5.25% looks like a good return in present low interest rate environment. Even if the interest rates go up- I do not see them rising beyond 1.50% to 2.00% within the next 3 to five years. Even then 5.25% looks like a good return. In the past 20 years how many times bank deposits have paid more than 5%.?

My only worry is how safe is the bond and how likely is the possibility of interest

payment default or repayment of capital on maturity? Any comments or guidance on this from experienced investors in retail bonds?

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Law Man

Aug 01, 2017 at 15:33

I like the concept of buying ORB bonds on issue, and holding to maturity - so you receive a certain return, subject to default risk.

I did not take this one up because:

(1) as a purely personal view I am not confident in P2P as an asset

(2) I was not clear what track record and experience the fund manager has. The holding company of this issuer was incorporated very recently

(3) I could not find tight covenants and controls to restrict the underlying loans and borrowers or the financial strength of the issuer.

However, more experienced investors may be content.

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Aug 01, 2017 at 16:57

My main concern about LendInvest is that in their last fiscal year they grew their lending by 25% but at the same time almost completely wiped out their profits.

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