“Investment educated savers have told us they are looking for ways to balance safeguards and security with making their money work a little harder.
High returns for sophisticated investors
Increased financial safeguards
Connecting income starved savers with capital starved SMEs
LONDON 15th JUNE 2015: Providence Bonds II plc, a UK arm of Providence Global, the financial services company, will launch its new Mini Bond on Friday 19th June, offering 7.5% interest per year paid every three months, with the full investment repaid at the end of the four year term.
The new Providence Bond has been designed to offer above average safeguards for investors, backed by a Parent Company Guarantee from Providence Global Limited, which has assets in excess of GBP75 million and guarantees the payment of both interest and capital.
The Mini Bond, which has a minimum investment requirement of GBP1,000, is aimed at an audience of investors who are looking for high return, short term alternative investment opportunities and want to make their money work harder for them. The offer period opens on 19th June.
New research amongst over-55s with a range of investments, released today by Providence, reveals that:
• The average investment portfolio is GBP 27,126, with 1 in 5 having more than GBP 50,000
• When looking at potential new investments, more than 70% said a good return on investment was the single most important criteria, above liquidity of the asset
• Men are more likely to look at new, alternative finance products, with 13% allocating around 10% or more of their portfolio to less traditional investments compared to just 5% of women
• More than 4 in 5 over-55 investors are self-educated and do their own due diligence without the help of a regulated financial adviser
James Vinall of Providence Bonds II plc, said, “Investment educated savers have told us they are looking for ways to balance safeguards and security with making their money work a little harder. Providence has a long history of raising money directly from the public to fund the commercial operations of the group and can clearly show how our business sustains these higher returns.
“People understandably wish to know more about our Parent Guarantee. We are providing clear information stating the net assets of Providence Global Limited that stand behind the Providence Bond liabilities.”
In the research carried out by Providence, 42% of over-55s who had never invested in Mini Bond said that a Parent Guarantee would make a difference to their view of the product.
Independent Portfolio Managers Ltd (IPM), authorised and regulated by the Financial Conduct Authority (FCA), has been appointed to act as Security Trustee for bondholders.
This launch marks a commitment by Providence to support small and medium size businesses in the UK by using the investment to help SMEs with their cashflow through factoring.
How the money is invested by Providence Bonds
The 7.5% interest rate is made possible due to the effective way that Providence invests the money in factoring companies in the UK and internationally.
Investor funds in the Providence Bonds II plc Mini Bond will only be used for factoring in the UK and established international operations in the USA, Brazil, Hong Kong and China.
James Vinall added, “We know that smaller businesses are the backbone of the UK economy and yet long invoice payment terms mean that many, particularly rapidly growing companies, have to put growth on hold. By providing short-term cash, through factoring, to successful SMEs when they need it most, we are helping them to grow, while also making a profit for our investors.
“We know there is strong demand in the UK and globally for this form of financing. The arrangements are also short-term, so money is constantly being recycled, significantly reducing any liquidity concerns.”
Today’s launch follows the successful close of the first Providence Bond issued in February 2015, which raised over GBP 5 million from more than 500 investors. The first interest payment was made to bond holders on 31 March 2015.
James Vinall said, “We are in the process of building our reputation with the investing British public. We want to build something that lasts for generations, based on strong partnerships with our factoring clients and our investors. We are passionate about funding Small and Medium Sized Enterprises that are the backbone of an economy, and are working to raise a total of GBP 25 million to really establish our UK factoring operations.
“We plan to raise between GBP5 million and GBP10 million with this particular 7.5% four year Providence Bond.”
For more information and a copy of the Invitation Document visit: www.providencebonds.com
Notes to editors:
Mortar Research conducted an online survey from the 30th May to 1st June 2015, among 2,000 UK adults aged 55 - 70+ with a range of investments. The research was conducted by Mortar London panelists. The margin of error which measures sampling variability is +/- 5%. The results have been statistically weighted according to the most current age and regional data.
Investors should be aware that, as with all Mini Bonds, the Providence Bond is not covered by the Financial Services Compensation Scheme, but it has been designed to address many of the main risks expected with Mini Bonds.
Potential investors and their regulated financial advisers should rigorously research the Invitation Document in order to assess the risk profile. Investments in Providence Bonds and the income from them caries risk so you may get back less than you invested.
About Providence Group and Providence Bonds II Plc
The Providence Group is a global, financial services business specialising in factoring for successful SMEs. Launched in the USA in 2004 by Antonio Buzaneli and Jose Ordonez, the group now has 21 offices in 12 territories. The business has recently moved its global business development headquarters to London.
Part of the purpose of the first Mini Bond issued by Providence was to establish the UK factoring operations of Providence to bring expertise gained in the USA, Brazil, China and Hong Kong to the benefit of UK SMEs.
The first Mini Bond has enabled Providence Global Factoring Limited to make two significant arrangements in the UK, with another three in progress. Providence is a partnership company, so chooses who it does business with very carefully. They believe in strong management, as a good team is better placed to ride out a storm where others might fail. Selecting these partners takes time and, since closing the first Mini Bond in February 2015, Providence is in the process of setting the best strategy for the UK and putting the management team in place, while taking opportunities as they appear with its existing structure.
Providence plans to have the UK based factoring company and operations in place before the end of 2015 using funds raised from the new Mini Bond.
Providence Global Limited (Ltd) is the parent of the international (non-USA) operations of the Providence commercial and financial services group. Its international administration headquarters are in Guernsey. Providence Global Ltd will provide the Parent Guarantee of all liabilities to the Bondholders. In addition there is a debenture over the assets of Providence Bonds II plc in favour of the Security Trustee.
Further information on Factoring
Factoring is a well-established process and highly-regulated industry across the world whereby invoices are bought at a reduced rate from thriving businesses that don’t want to wait the usual 60 or 90 days to be paid. The cash is released to the company immediately and when the invoice is cleared Providence receives the full cash balance and then repeats the process.
Providence only factors businesses that have undergone a credit check and that show assured revenue rather than predicted sales. This means that the funds will support thriving businesses who have undergone due diligence and satisfied a strict criteria for lending, and provide security against the debt.
Providence has calculated the 7.5% interest for the Providence Bond II plc based on the typical UK SME selling on its invoice at a discount of 1.5% per month, which is an annual rate close to 20%. After all the running costs, credit and guarantee procedures, provisions and profit margins, a fair distribution of the risk and reward was calculated as 7.5% for bondholder investors.
For further information or to arrange an interview, please contact Holly Ward or Tanya Baird at The Forge Communications
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