Golf travel company Golfbreaks.com has launched its second mini-bond, offering investors 7.5 per cent gross interest payable in cash.
Golfbreaks is aiming to raise £2m to fast track its operational and marketing developments in the US, Scandinavia and the UK, as well as further strengthening its technology platforms.
The Golfbreaks Bond Two, launched today (3 October), is a four-year initial fixed-term mini-bond that claims to give investors the opportunity to earn a 7.5 per cent gross return a year paid in cash.
The minimum investment is £2,000 with multiples of £1,000 thereafter, and a maximum limit of £100,000.
At the end of the four-year initial fixed term, bondholders have the option to extend the term of their Golfbreaks Bond Two by successive one-year periods.
Since raising £2.9m through its first bond offer in 2014, Golfbreaks.com has grown its annual turnover to £55 million, booked holidays for 200,000 golfers in 2015, and established operations in the US and Scandinavia.
Recently Golfbreaks.com acquired the premium golf travel business Xclusive Golf, which was owned by Sarah Stirk, presenter of Sky Sports’ golf coverage.
Jason Hollands, managing director of business development and communications at Tilney BestInvest, said: “While it is easy in the current environment to get dazzled by a very high yield, this is an illiquid, non-transferable investment in an unrated debt security of an unquoted, smaller company.
“The investment will not be covered by the Financial Services Compensation Scheme in the event of a default. I would therefore slap a big ‘caveat emptor’ sign over these types of issues.”
Patrick Connolly, head of communications at Chase de Vere, said while the returns on this bond appear competitive, particularly with general interest rates at historic lows, it would be a mistake to compare them directly with those from savings accounts.
He said: “Investing in a mini-bond such as this could be high risk, especially if the money represents a significant proportion of somebody’s overall portfolio.
“While there is undoubtedly high interest in golf and golfing holidays, and the company seems to have performed well in the past, there are always risks when companies want to grow, especially if they’re planning to move into new markets.
“For most people, the extra risks involved in buying mini bonds such as this, together with the lack of protection, mean that they aren’t suitable, and where they are used it should only be for a very small proportion of an overall portfolio.”
