Bonds  

Product review: APS Bond

Product review: APS Bond

A new fixed-term mini-bond has been launched by APS.

Review

Challenger bank APS Financial has launched a £5m four-year fixed-term mini-bond with a view to help support products. 

Dubbed the APS Bond, the product will provide support for APS’s digital assets and technology as well as new services and products for SMEs. 

Investors can save up to £250,000 per year, with a minimum investment of £1,000, and a return of 7 per cent paid twice a year. The APS Bond is unlisted and non-transferrable, and investors will see their original investments returned at the end of the four-year period. 

APS Financial, a digital banking and electronic money service provider, says more than 70,000 SMEs now hold accounts relating to its Cashplus product. Last year it also announced a tie-up with the Post Office to boost its distribution.

The firm operates without a banking licence, so cannot lend money other than via its own account. APS posted revenues of £25.3m in the 12 months to 31 March, and £4.1m in earnings before interest, tax, depreciation and amortisation.

www.apsbond.nevilleregistrars.co.uk/

Comment

With interest rates at an all-time low – much to the increasingly vocal dismay of many politicians – the rate available on this bond looks attractive.

APS Financial has grown in prominence in recent years, and a 23 per cent increase in revenues for 2015 indicate it is gaining customers, too.

However, given recent controversies over mini-bonds, investors would be wise to approach new opportunities with caution. 

Concerns were raised after Providence Financial Investments, a US based business, went into administration earlier this year following findings of “fraudulent” securities, shortly after offering UK investors a mini-bond via a subsidiary firm.

As a result, a slew of investors were left in the lurch, highlighting some of the general risks associated with mini-bonds, including the fact that they are not protected by the Financial Services Compensation Scheme. This means that investors are unlikely to see their lump sums returned to them should a business fall into administration.

Nonetheless, with twice-yearly returns at 7 per cent, meaning investors paying £100,000 will see a £7,000 yearly return and £128,000 once the bond matures, the APS bond will appeal to those with greater risk appetite. 

kuba.shandbaptiste@ft.com