English professional rugby union club Wasps has launched a retail bond on the London Stock Exchange with the aim of raising between £25m and £35m.
The club is offering a fixed gross rate of interest of 6.50 per cent each year until it is due in 2022.
The bonds will be secured by the two key operating companies, Wasps Holdings and Arena Coventry, including the 32,600-seat Ricoh Arena in Coventry, which includes: a 6,000sqm indoor facility that can host up to 12,000 people; a casino; two restaurants; a 121-room hotel and more than 20 retail, food and beverage outlets onsite.
Interest will be every six months, on 13 November and 13 May in each year, with the investment due to be paid back in full on 13 May 2022, unless the bonds are repaid early.
The minimum initial investment is £2,000. Thereafter they can be bought and sold in multiples of £100 – though the actual price the investor pays or receives for each bond may be higher or lower than this depending on the market price of the bonds at the time.
Trading in the bonds is due to start on 14 May.
Wasps group chief executive David Armstrong said: “We are delighted to announce the launch of Wasps’ debut retail bond, which will be tradable on the London Stock Exchange’s Order Book for Retail Bonds, and is the first transaction of its kind for the sports industry.
“The move to the Ricoh Arena was transformational for Wasps, and our new home provides us with multiple income streams and the opportunity to create one of the UK’s premier sport, business and entertainment complexes, while offering sponsors and partners the exciting opportunity to get involved with the new second home of English rugby.”
A minimum investment of £2,000.
Matthew Clark, director and chartered financial planner at Devon-based Seabrook Clark, said: “The rate of interest is extremely competitive. It is above anything else you would find in the marketplace.
“These types of investments often offer very attractive rates which would be difficult to find in other propositions elsewhere. However, clients should appreciate that this is not your typical cash-holding investment and there are risks which should always be at the back of their minds. Clients are risking the capital they put in – if the company offering the bonds runs into financial problems, it may not be able to return the complete sum of the initial investment. Also, the firm may not be able to meet its deadline to pay investors.
“I recommend this type of investment as part of a diversified portfolio but not on its own.”
Bond investments are interesting propositions. If the firm offering the bonds does not encounter any financial hiccups throughout the term of investment, and is able to make the repayment deadlines, investors can reap the benefits of a handsome rate of interest on their initial investment. Here, the bonds are secured against a host of assets including the Ricoh Arena. With an extremely competitive rate of interest, this proposition could prove popular with many investors.