AN INNOVATIVE new investment vehicle to provide funds to support UK property deals – commercial and residential – has been launched by an Aberdeen-based private equity firm in conjunction with a financial technology (fintech) specialist.
MAVEN Bonds has been designed to provide investors with the chance to diversify their investment portfolio while earning annual tax-free returns of up to 7.75%.
Aberdeen-based Maven Capital Partners in conjunction with North East of England-based fintech company Growth Capital Ventures (GCV) aim to raise up to £7m from the initial bond offer. Minimum investments start at £1,000.
The bond works by providing secured loans to property developers and property development companies. Returns are generated by charging interest and fees on these loans.
The venture has been driven by rising demand for good quality housing. It is also a response to the lack of affordable mainstream finance available to property investors in many sectors such as hotels, student accommodation and residential.
It gives MAVEN Bonds investors who are looking for higher risk investments the potential to earn much higher returns than those offered by other tax-free investments such as cash ISAs. By holding the bonds within an Innovative Finance ISA (IFISA), any returns are tax free.
Simon Lenney, independent chairman of Maven Bonds, said: “The Innovative Finance ISA market is growing rapidly, with more than £1 billion invested since April 2016. For investors happy to take on more risk, the IFISA is a viable alternative investment product because, in the current climate, traditional cash ISAs are struggling to offer returns that even match the rate of inflation.
“Together with the property teams at Maven and GCV, we’ve already generated a strong pipeline of transactions for MAVEN Bonds that will help to deliver much needed high-quality housing developments and commercial property schemes, whilst delivering better risk-adjusted returns for investors.”
Since January 2015, the combined Maven and GCV advisory team have completed property transactions worth more than £300 million, leveraging over £125 million of equity in the process.
Craig Peterson, chief operating officer at GCV, said: “Our core objective is to provide investors with higher returns than those currently available through traditional investment routes, whilst simultaneously providing secured loans for experienced borrowers within the UK property market.
“These loans are ideal for borrowers who have previously funded their property transactions solely through money secured from mainstream banks. A continued period of conservative bank lending has opened a gap in the market for alternative types of finance throughout all areas of the UK property sector, and that’s where MAVEN Bonds come in.
“Our intention is to deliver a diversified portfolio of high-quality loans across the residential and commercial property spectrum, and we’ll look for opportunities to co-lend with banks and other institutional investors where appropriate.”