New: MAVEN Bonds – up to 7.75% p.a. secured asset-backed bonds
Maven is raising up to £7 million in the form of asset-backed secured bonds to finance a diversified portfolio of commercial and residential property developments.
The bonds aim to pay investors an effective fixed-rate of interest of up to 7.75% p.a. – not guaranteed. Investors can choose the term of the bond – either to March 2021 or to March 2023. They can also choose whether to have interest paid quarterly or rolled up and paid at the end of the term.
Although a new offer, Maven is an established and well respected alternative asset manager with over £600 million of assets under management. It has an existing specialist property team with significant expertise in investment, development, asset management and financial structuring.
- Secured loans to a diversified portfolio of property developers, property development companies and trading property entities
- Effective fixed rate of interest of up to 7.75% (interest rolled up and paid at the end) or up to 5.75% p.a. (interest paid quarterly) – not guaranteed
- Planned maturity date: March 2023 or March 2021
- Asset backed – loans will typically hold first-ranking security
- Experienced management team that has invested in – or advised on – property projects worth over £300 million
- Independent Security Trustee in place
- Minimum investment £1,000
- Available in an ISA for tax-free interest
- Apply online
Attractive fixed rate
MAVEN Bonds offer effective fixed rates of interest ranging from 4.75% p.a. to 7.75% – not guaranteed. Below we show illustrative returns for different investment amounts, assuming you invest this month.
Maturity date March 2023 (Series 1) – illustrative returns, not guaranteed
|Interest rolled up (Series 1A)|
|Effective annual interest rate (not guaranteed)||7.75%||7.75%||7.75%|
|Total gross interest paid at end of term||£2,713||£6,781||£13,563|
|Interest paid quarterly (Series 1B)|
|Quarterly interest rate (not guaranteed)||5.75%||5.75%||5.75%|
|Gross interest paid quarterly||£144||£359||£719|
|Total gross interest paid over the term||£2,013||£5,031||£10,063|
Maturity date March 2021 (Series 2) – illustrative returns, not guaranteed
|Interest rolled up (Series 2A)|
|Effective annual interest rate (not guaranteed)||6.75%||6.75%||6.75%|
|Total gross interest paid at end of term||£1,013||£2,531||£5,063|
|Interest paid quarterly (Series 2B)|
|Quarterly interest rate (not guaranteed)||4.75%||4.75%||4.75%|
|Gross interest paid quarterly||£119||£297||£594|
|Total gross interest paid over the term||£713||£1,781||£3,563|
Any interest you receive is normally subject to 20% withholding tax. If you invest through an ISA any interest should be tax free. Interest is calculated daily. Where Interest is paid quarterly, interest shall be paid on the last business day of the months of June, September, December and March, with the final payment on the redemption date. Rates and interest payments are not guaranteed, nor is the capital repayment at the end of the term. Please remember tax rules can change and benefits depend on circumstances.
Receive the income tax free in an ISA
Interest earned from MAVEN Bonds is normally subject to income tax at your marginal rate. Basic rate tax is withheld on all interest payments. However, if you hold the bond in an ISA, tax will not be payable. This is possible by either subscribing to the IFISA (up to £20,000 this tax year) or by transferring existing ISAs into it.
Target loan book allocation
Maven aims to diversify the loan book across five property development sectors, although, as the chart below shows, there will be a bias towards residential property developments. The loans will generally take first ranking (or equal first ranking) security on the borrowers’ assets.
All potential opportunities are originated from the Group’s Advisory team – Maven Capital Partners, Homes by Carlton and Growth Capital Partners. Each opportunity is screened and presented to the Investment Committee for approval.
Across all asset classes (except special situations) borrowers will need to demonstrate a track record of successfully completed property developments. Lending will typically be for projects with minimal planning risk where permissions and associated project rights have already been granted.
The investment team will monitor each loan closely throughout the term. For more complex projects, MAVEN Bonds will work alongside a specially appointed external surveyor.
Any returns are expected to be generated by charging interest and fees to borrowers (not by investing in the ownerships of the property) although there are no guarantees.
Residential development (50%)
Supply of residential homes remains constrained. In 2016/17 178,000 new homes were completed – 122,000 short of the government’s target of 300,000 new homes a year. MAVEN bonds will make loans of between £300,000 and £3 million targeting smaller residential development schemes. This tends to be below the level at which major housebuilders will operate. Historically, this type of project was funded by banks, which have now taken a conservative approach to property lending, opening a gap in the market. MAVEN Bonds will lend in this gap.
Hotel and commercial development (20%)
As an asset class, hotel real estate has become much more established. MAVEN Bonds will also consider commercial developments – which are ideally pre-let or pre-sold – such as warehouses and retail outlets.
Student accommodation (15%)
Demand for quality purpose-built student accommodation has increased as more students come to study in the UK from overseas. In addition, few UK-based students stay in their home region, again increasing demand for accommodation.
A minority of the loan book is expected to be allocated to bridging finance (10%) and special situations (5%).
Below are examples of the type of project previously financed by Maven. Bondholders will not get exposure to these.
Middleton St George, Tees Valley: A residential development with detailed planning consent for 198 high-quality family homes developed over four phases. Phase 1 is a mix of three, four- and five-bedroom homes which have been carefully designed to meet local market need.
The development of a new 127-bedroom Holiday Inn Express hotel in the centre of Barrow-in-Furness, Cumbria. The hotel is to be operated under a franchise agreement with InterContinental Hotels Group once completed.
What protection do bondholders have?
Bondholders will be investing in one company, MAVEN Bonds plc. All bonds will rank equally irrespective of when they’re issued and will hold a debenture over the assets of MAVEN Bonds plc, which includes its loan book. The loan book will be secured by first-ranking (or equal first ranking) security on land, property and applicable assets of the underlying borrowers.
Where Maven Finance co-lends, it will generally do so on the basis that its security ranks equally with its co-lenders on a pari-passu basis. On some occasions, however, where the directors believe the commercial opportunity and risk profile are justified, Maven Finance may lend to a borrower who will also raise debt from a bank or another commercial lender on preferential terms to Maven Finance and a second ranking charge may be taken.
What experience does the manager have?
The bonds are offered by MAVEN Bonds plc and its subsidiary Maven Finance Limited, which carries out the money lending.
MAVEN Bonds plc is owned 50% by Maven Capital Partners and 50% by Growth Capital Ventures. Both shareholders, as well as property development company Homes by Carlton, act as the advisory team for MAVEN Bonds plc.
Maven Capital Partners is a leading venture capital firm with over £600 million in assets under management. Maven has an established specialist property investment team that offers expertise in investment, development, asset management and financial structuring.
Growth Capital Ventures is an investment firm focused on identifying and structuring property and EIS-eligible investment opportunities.
Homes by Carlton is a strategic partner that has a development pipeline of high-quality housing schemes in the North of England. It has a demonstrable track record spanning land acquisition, house building, sales and marketing, contracting and property development.
Since January 2015, the combined advisory team has completed over £300 million of property transactions across residential schemes, hotel and student developments and commercial property projects. The team has over 100 years of combined property and lending experience.
City Partnership Trustee Limited has been appointed as the Independent Security Trustee.
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
Bonds such as these are not readily realisable. They tend to be illiquid and hard to sell and value. They should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
Tax rules can change and benefits depend on circumstances. The bonds are unregulated. As with all bonds of this type they are not covered by the Financial Services Compensation Scheme.
The bonds are technically transferrable, however, there is no secondary market, so investors should assume they will need to be held for the full term.
If you invest in the Series 1A or 2A, interest is rolled up and not paid out until redemption, expected in March 2023 or March 2021 respectively.
Interest is paid net of 20% UK withholding tax (currently 20%) unless the bond is held in an ISA.
A bond is an investment in a single Company, namely MAVEN Bonds plc. Underlying loans made by Maven Finance will be to a diverse portfolio of assets within several different companies over which security will be taken, however, if Maven does not perform as planned, repayment to bondholders will be impacted.
More details on risks are in the Information Memorandum.
There are no fees payable by bondholders. MAVEN Bonds levies fees against the borrowers – typically an arrangement fee of 1% to 2.5% of the value of the loan. Maven will pay Wealth Club an introducer fee of 2.25%. The borrower also pre-agrees an interest rate and an exit fee of around 1% to 2.5% of the value of the loan. Borrowers may also pay monitoring fees to Maven Finance.
These asset-backed bonds offer in our view an attractive rate of interest and give investors a choice between having the interest compounded and paid at maturity or paid quarterly. Investors also have the choice over the term of the investments – to March 2021 or to March 2023.
Please note, rates and interest payments are not guaranteed, and capital is at risk.
Loans will be provided to an increasingly diverse portfolio of assets, and debt drawdowns will be in accordance with pre-agreed milestones. It is pleasing that for more complex projects, external surveyors will be employed to oversee this process.
Overall, we see this as an interesting fixed-rate investment opportunity for experienced investors, but you should form your own view.
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
MAVEN Bonds – up to 7.75% p.a. secured asset-backed bonds
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