retail charity bonds - london stock exchange of orb page 8 london stock exchange • in february...
TRANSCRIPT
Retail Charity Bonds is an initiative of Allia, established in association with Canaccord Genuity
Retail Charity Bonds is an initiative of Allia, established in association with Canaccord Genuity
Tim Jones, Allia
www.retailcharitybonds.co.uk
1999
CHARITABLE OBJECTS
The provision of loans, guarantees and other
financial instruments on beneficial terms to charities or for charitable purposes by receiving donations and obtaining loans from, and issuing bonds on beneficial terms to the public and others in order to provide such loans and guarantees;
Welcome
www.retailcharitybonds.co.uk
Conversations
Gillian Walmsley
Phil Caroe
Henrietta Podd
Alastair Graham
You
Raising capital on the
Order book for Retail Bonds
Driven by investor demand
London Stock Exchange Page 2
• Increasing private investor focus on fixed income
• Bond funds saw record inflows in 2009 and 2010
• Strong demand from UK private client brokers for easier access to bonds
• Private investors keen to take more active role in managing their portfolio and reduce transaction costs
Meeting corporates’ funding needs
London Stock Exchange Page 3
• Challenging funding environment, with regulation driving banks to limit provision of credit or to concentrate lending to largest companies only
• UK companies seeking to diversify their funding strategies, to reduce risks and decrease overall costs
• Innovative financing tools are key to create an efficient capital structure
Source: European Central Bank
Launch of ORB
London Stock Exchange Page 8
• In February 2010, the London Stock Exchange
launched its new electronic bond market for
retail investors – the Order book for Retail
Bonds (ORB)
• Key aims of ORB are to develop both an
efficient, transparent secondary market in
bonds for UK private investors and to establish
a primary market for distribution of dedicated
retail bonds – opening up new sources of capital for
companies seeking to diversify their funding
A new funding tool for corporates
London Stock Exchange Page 5
• ORB has now established itself as an alternative
source of funds for a wide range of corporates
looking to raise debt capital through capital
markets
• A guide for issuers interested in issuing bonds on
ORB is available on London Stock Exchange’s
website: londonstockexchange.com/ORBguide
ORB is suitable for businesses of all sizes and across all
sectors, helping them tap into a new pool of capital outside
of the traditional wholesale markets. We have seen a wide
range of companies issue bonds on the platform, from large
household names such as National Grid through to midcap
companies such as Workspace Group, a provider of office
space for small and medium-sized companies
Xavier Rolet, CEO of London Stock Exchange Group
ORB dedicated issues
London Stock Exchange Page 6
• 50 ORB-dedicated new issues and 6 taps of existing ORB issues have raised more than £4.5 billion since launch
• 32 different issuers have successfully tapped the retail bond investor community, including:
National Grid, Premier Oil, Ladbrokes, Tesco Bank, Tullett Prebon, Unite Group, Provident Financial…
• Widening investor base - increasingly strong
demand for retail bonds from retail brokers, wealth managers and private investors
Why issue on ORB Diversification and flexibility
London Stock Exchange Page 7
Alternative source of funding - issuing retail bonds onto ORB, issuers are
able to tap into a new source of funding and diversify into a new pool of retail
liquidity. A retail bond can either be an alternative source of funding or
complement existing channels
Flexibility - ORB offers greater flexibility for issuers as the size of a retail bond
can be tailored to meet issuers’ particular needs; issue sizes on the ORB have
ranged from £20 million to £300million.
Sensible covenant structure works well for issuers and investors
Structure - Retail bonds have been characterised by simple structures,
however we have seen fixed, floating and index linked bonds issued onto the
market
Why issue on ORB Transparency and liquidity
London Stock Exchange Page 8
Transparency – the high level of transparency offered by the Order book for
Retail Bonds is a key benefit for investors and issuers: • thanks to the commitment of ORB dedicated market makers, investors can see
continuous tradable prices on-screen and issuers are able to infer the exact
current yield on their bonds at any time
• bond documentation for all the securities on ORB is available on the London
Stock Exchange’s website
Regulatory supervision – ORB is a EU regulated market monitored and
supervised by the London Stock Exchange’s Market Supervision Team
throughout the trading day
Strong secondary market liquidity – this also drives demand in the primary
market, giving investors confidence that they will be able to trade out easily if
they need
Market Open Ceremony
• Listing a bond on one of London Stock Exchange’s markets is one of the most
exciting days in a company’s development and growth. To mark the occasion,
London Stock Exchange invites new admissions to ‘Open the Market’ and take
part in the prestigious Market Open Ceremony.
• Hosted by a Senior Executive from London Stock Exchange Group, the
ceremony offers companies joining London Stock Exchange's markets the
opportunity to mark their success on the day of their admission.
• The Market Open Ceremony offers its participants a high profile platform to
launch a media campaign or raise the company’s profile.
• Members of the press can be invited to attend the ceremony and conduct
interviews with guests. A live TV feed can be arranged and our high
specification studio facilities can be made available for media interviews.
• A photographer is also present and the company can maximize its exposure
through the Exchange’s press team from organisations such as the BBC, The
Wall Street Journal, the Financial Times, CNBC & Sky News.
Page 9
Why issue on ORB Public Profile
London Stock Exchange
Golden Lane Housing Market Open
Hightown Praetorian Market Open
Page 10
Case Study: Retail Charity Bonds
Market partners
London Stock Exchange Page 11
• ORB is currently supported by ten market makers:
– Investec Bank, Lloyds TSB Bank and Winterflood Securities in gilts
and corporates
– Canaccord Genuity, Peel Hunt and Shore Capital across corporate
bond range
– Jefferies International in gilts
– HSBC, BNP Paribas and Numis Securities in a range of corporates
• We continue to work with market partners supporting them with PR
and marketing activity to further develop ORB
• Dedicated partner logos may be displayed by participants
• Listing Fee Waiver for debt securities issued by Charities
ISIN Issuer Name Date
Listed
Maturity
(year)
Coupon
Value
Coupon
Type
Minimum
Denomination Issue Size
XS1221940510 Wasps Finance plc 14/05/2015 7 6.50 F 100 £35 million
XS1200788369 Retail Charity Bonds plc (Hightown) 01/05/2015 10 4.40 F 100 £27 million
XS1205758219 Provident Financial plc 14/04/2015 8.5 5.125 F 100 £60 million
XS1200576699 Intermediate Capital Group plc 24/03/2015 8 5.00 F 1000 £160 million
XS1112834608 Eros International Plc 16/10/2014 7 6.5 F 100 £50 million
XS1103286305 A2D Funding II Plc 01/10/2014 12 4.5 F 100 £150 million
XS1088905093 Burford Capital plc 20/08/2014 8 6.5 F 100 £90 million
XS1066485902 Retail Charity Bonds plc (MCAP) 30/07/2014 7 4.375 F 100 £11 million
XS1066478014 Ladbrokes Group Finance plc 17/06/2014 8.25 5.125 F 100 £100 million
XS1018830270 The Paragon Group of Companies PLC 30/01/2014 8 6.125 F 100 £125 million
XS0997703250 Premier Oil plc 11/12/2013 7 5.00 F 100 £150 million
XS0975865949 A2D Funding Plc 21/10/2013 9 4.75 F 100 £150 million
XS0947705215 Bruntwood Investments plc 25/07/2013 7 6.00 F 100 £50 million
XS0942129957 Helical Bar plc 25/06/2013 7 6.00 F 100 £80 million
XS09194068004 International Personal Finance plc 08/05/2013 7 6.125 F 100 £101.5 million
XS0900863084 Provident Financial plc 27/03/2013 8.5 6.00 F 100 £65 million
XS0891023086 The Paragon Group of Companies PLC 03/03/2013 7.75 6.00 F 100 £60 million
Order book for Retail Bonds
ORB dedicated issues - (1)
ISIN Issuer Name Date
Listed
Maturity
(year)
Coupon
Value
Coupon
Type
Minimum
Denomination Issue Size
XS08805787285 EnQuest PLC 15/02/2013 9 5.50 F 100 £155 million
XS0853358801 Alpha Plus Holdings plc 19/12/2012 7 5.75 F 100 £48.5 million
XS0856594642 UNITE Group plc 12/12/2012 7.5 6.125 F 100 £90 million
XS0859261520 Tullett Prebon plc 11/12/2012 6.5 5.250 F 100 £80 million
XS0841076465 St. Modwen Properties plc 07/11/2012 7 6.25 F 100 £80 million
XS0846486040 London Stock Exchange Group plc 05/11/2012 9 4.75 F 100 £300 million
XS0832324981 Workspace Group plc 10/10/2012 7 6.00 F 100 £57.5 million
XS0827693663 Beazley plc 25/09/2012 7 5.375 F 100 £75 million
XS0818634668 Intermediate Capital Group plc 20/09/2012 8 6.25 F 100 £80 million
XS0820711215 CLS Holdings plc 12/09/2012 7.25 5.50 F 100 £65 million
XS0805454872 ICAP plc 31/07/2012 6 5.50 F 100 £125 million
XS0795445823 Primary Health Properties plc 24/07/2012 7 5.375 F 100 £75 million
XS0796078193 Severn Trent plc 11/07/2012 10 1.30 (IL) IL 100 £75 million
XS0780063235 Tesco Personal Finance plc 21/05/2012 8.5 5.00 F 100 £200 million
XS0762418993 Provident Financial plc 04/04/2012 5.5 7.00 F 100 £120 million
XS0731910765 Places For People Capital Markets 31/01/2012 10 1.00 (IL) IL 100 £40 million
XS0716336325 Intermediate Capital Group plc 22/12/2011 7 7.00 F 100 £35 million
Order book for Retail Bonds
ORB dedicated issues - (2)
Order book for Retail Bonds
ORB dedicated issues - (3)
ISIN Issuer Name Date
Listed
Maturity
(year)
Coupon
Value
Coupon
Type
Minimum
Denomination Issue Size
XS0710391532 Tesco Personal Finance plc 16/12/2011 8 1.00 (IL) IL 100 £60 million
GB00B3YYW134 Royal Bank of Scotland 07/11/2011 7 2.00 (V) Variable 1000 £20 million
XS06785224903 National Grid plc 30/09/2011 10 1.25 (IL) IL 100 £282.5 million
XS0635014177 Places For People Capital Markets 27/06/2011 5.5 5.00 F 100 £140 million
XS0605672558 Provident Financial plc 31/03/2011 5.5 7.50 F 100 £50 million
XS0604804194 Lloyds TSB Bank plc 25/03/2011 5.5 5.50 F 1000 £150 million
XS0602217159 European Investment Bank 11/03/2011 5.5 3.25 F 100 £350 million
XS0591029409 Tesco Personal Finance plc 25/02/2011 7.5 year 5.20 F 100 £125 million
GB00B42SH312 Royal Bank of Scotland 21/02/2011 6 year 2.00 (V) Variable 100 £10 million
GB00B442CZ84 Royal Bank of Scotland 17/01/2011 7 year 3.30 F 100 £15 million
GB00B4MTS3172 Royal Bank of Scotland 06/12/2010 10 year 0.00 (V) Variable 100 £35 million
GB00B4RM3T66 Royal Bank Of Scotland plc 01/11/2010 12 year 3.90 (V) Variable 100 £20 million
GB00B4P95L571 Royal Bank Of Scotland plc 01/11/2010 12 year 3.90 (V) Variable 100 £35 million
XS0517466198 Lloyds TSB Bank plc 21/06/2010 5.25 year 5.375 F 100 £75 million
XS0496412064 Provident Financial plc 15/04/2010 10 year 7.0 F 1 £25.2 million
GB00B3N3WC23 Royal Bank of Scotland 01/02/2010 10 year 5.10 F 100 £50 million
Issuer National Grid plc
Sector Utilities
Shares listed Yes
Issue date 30 September 2011
Issue size £282.5 million
Coupon 1.25% IL
Maturity 10 year
Status Senior, Secured
Lead Manager Evolution Securities Ltd / Barclays Bank plc
Authorised
Distributors
Barclays Stockbrokers, Charles Stanley, Killik
& Co, Redmayne Bentley, Selftrade, Smith &
Williamson, Williams de Broe
Case study (1) National Grid plc
London Stock Exchange Page 15
Case study (2) EnQuest plc
London Stock Exchange Page 16
Issuer EnQuest PLC
Sector Oil & Gas
Shares listed Yes - FTSE 250
Issue date 15 February 2013
Issue size £145 million
Coupon 5.5% Fixed
Maturity 9 year
Status Senior, Unsecured
Lead Manager Numis Securities
Authorised
Distributors
Barclays Stockbrokers, Brown Shipley, Killik
& Co, Redmayne-Bentley, RIA Capital
Markets, Selftrade, Smith & Williamson,
Stocktrade
Issuer London Stock Exchange Group plc
Sector Exchange Industry
Shares listed Yes - FTSE 100
Issue date 5 November 2012
Issue size £300 million
Coupon 4.75% Fixed
Maturity 9 year
Status Senior, Unsecured
Lead Managers Barclays, Lloyds, RBS
Authorised
Distributors
Barclays Stockbrokers, Charles Stanley,
Halifax Sharedealing, Hargreaves Lansdown,
Killik & Co, Numis Securities, Peel Hunt,
Redmayne Bentley, Selftrade, Shore Capital,
Smith and Williamson, Stocktrade
Case study (3) London Stock Exchange Group plc
London Stock Exchange Page 17
Contact us Fixed Income Team
London Stock Exchange
Tel: +44 (0)20 7797 3921
Page 18
Retail Charity Bonds is an initiative of Allia, established in association with Canaccord Genuity
Phil Caroe, Allia
www.retailcharitybonds.co.uk
Overview
Designed to raise:
> £10-50 million
> unsecured, lightly covenanted loan finance
> at a fixed rate
> for 5-10 years
> from mainstream ethical investors
www.retailcharitybonds.co.uk
Issuing listed bonds
To issue a listed bond, issuers must:
> be a plc
> comply with the Prospectus Rules
> ensure ongoing compliance
Retail Charity Bonds makes listed bonds
possible for charities at affordable cost
www.retailcharitybonds.co.uk
Retail Charity Bonds
> Special purpose issuing vehicle
> Independent credit review
> Standardised documentation
> Bond administration managed by Allia
www.retailcharitybonds.co.uk
Who is it for?
> Established UK charities
> Strong revenue generation
> Sufficient asset cover
> Planning asset purchase / development /
refinancing
> Track record of impact
www.retailcharitybonds.co.uk
Process
Application
Due diligence
RCB plc
decision
Arrangement
UKLA
submission
Receipt of
funds
Roadshow
Offer period
0 1 2 3 months
www.retailcharitybonds.co.uk
Contact
Phil Caroe, Director of Social Finance
01223 781303
07896 122441
Allia Bond Services Limited (“ABS”) (company no. 9033937) is a trading company of the charity Allia Ltd, a community
benefit society registered under the Industrial and Provident Societies Acts (No. 28861R). Both ABS and Allia Ltd have
their registered office at Future Business Centre, King’s Hedges Road, Cambridge CB4 2HY.
Retail Charity Bonds is an initiative of Allia, established in association with Canaccord Genuity
Henrietta Podd
Canaccord Genuity
What is a Retail Charity Bond?
> A way of raising term debt via a regulated market
> By offering a simple, transparent security
> Attractive to a very wide range of investors
> Retail investors – wealth managers & individuals
> Supporters and donors
> Other charities and Specialist SRI funds
> Pension funds and other wholesale investors
www.retailcharitybonds.co.uk
What investors want
Bond features:
> Mainstream fixed income bonds
> Listed on London Stock Exchange
> Commercial return (4 - 4.5%)
> Medium tenor (5 - 10 years)
> Unsecured, light covenants
> No rating needed
www.retailcharitybonds.co.uk
Distribution
> Managed by Canaccord
> Using prospectus and authorised marketing materials
> Roadshow event for institutional investors and retail intermediaries + one to one meetings
> Authorised distributors alert clients to launch
> PR campaign to notify wider public
> 2 - 3 week process
> Pricing driven by demand
Distribution
Charity money
9%
Execution-Only Broker
17%
Institution 33%
Ethical/SRI 18%
Stockbroker/wealth manager
23%
HPCHA GOLDEN LANE
www.retailcharitybonds.co.uk
Contact
Henrietta Podd, Managing Director
DDI: 020 7523 8020 M:07939 117614 Neither the whole nor any part of the information in this pitch/presentation may be disclosed to, or used or relied upon by, any other person or used for any other purpose and, in particular,
should not be distributed outside the United Kingdom, without the prior written consent of Allia. The material contained herein may include unpublished price sensitive information, the misuse
of which may result in criminal and/or civil proceedings against you.
None of the information on which this pitch/presentation is based has been independently verified by Allia or Canaccord Genuity or any of their connected persons. Accordingly, neither Allia,
Canaccord Genuity nor any of their connected persons accepts any liability or responsibility for the accuracy or completeness of, nor makes any representation or warranty, express or
implied, with respect to, the information on which this pitch/presentation is based or that this information remains unchanged after the issue of this pitch/presentation.
No duty of care or otherwise is owed by Allia, Canaccord Genuity or any of their connected persons to any other person in relation to this pitch/presentation.
This presentation has been prepared on the basis and assumptions described herein. This presentation is not intended to provide the basis of any investment decision and should not be
considered as a recommendation by Allia, Canaccord Genuity or any of their connected persons to any recipient of the presentation. No person has been authorised to give any information
not contained in this presentation. Nothing in this pitch/presentation is, or should be relied on as, a promise or representation as to the future.
In this notice, “Allia” means Allia Ltd, “Canaccord Genuity” means Canaccord Genuity Limited and “their connected persons” means, the respective holding companies of Allia Ltd, Canaccord
Genuity Limited or their shareholders, subsidiaries and subsidiary undertakings of such holding companies and their respective directors, officers, employees and agents of each of them.
Retail Charity Bonds:
the experience of
Golden Lane Housing
Alastair Graham
Director of GLH
25th June 2015
Golden Lane Housing (GLH)
• Leading national charity providing housing for people with a learning disability
• Established in 1998 by Mencap, now owns and leases 700 properties across England and Wales which are home to 1,500 tenants with a learning disability
• Historically able to get public grants and private loans
• Provides specialist housing management and maintenance but not personal support and care
• Works with over 100 local authorities and support providers
• Rental income pays for management, maintenance and servicing our capital
The opportunity
• Private investment: institutional and retail
• Low interest rates and low inflation = good macro economic climate for bonds
• Capital asset: 500 properties = £83m
• Reliable rental income stream: £11m pa
• Track record
Previous GLH Bonds
2003
• 10 year bond at RPI plus 1% raised £1.8m
2013
• 5 year bond at 4% fixed rate raised £10m
• Mainly from charitable trust funds and social investors: not much left!
• But lots of individual investors too
• Good publicity: importance of the brand
• Little liquidity: not listed
2014
• where to get substantial new investment?
Listing on London Stock Exchange
• Provides ‘liquidity’ as investors can sell anytime during the term
• Attracts investors so can raise larger amounts and/or offer lower rate/longer term
• GLH cannot list as we’re a charity –need to be a public limited company (plc)
• Retail Charity Bonds (RCB) plc was established in 2014
RCB plc
• Innovative new platform for social organisations to issue listed bonds
• GLH was the first ever listed charity bond in June 2014
• Raised £11m in less than two weeks (had to close early to avoid being over-subscribed)
• 4.375% fixed rate for seven year fixed term (extendable to 9 years at GLH’s sole discretion)
Why did it work?
Investors
• Good rate
• Net asset covenant
• Listed
• Reliable income
• Track record
• Ability to re-finance at end of term
GLH
• Good rate
• No security needed
• No deposit needed
• Reliable income
• Track record
• Ability to re-finance at
end of term
Great publicity
• Increasing awareness of issues to do with learning disability and housing
• Positive images and coverage
• Challenging stereotypes of learning disability
• Raising the profile of GLH and Mencap
What is the money being spent on?
• Buying and adapting over 30 new houses and bungalows across England and Wales
• These will become homes to over 100 people with a learning disability
• Spent £9m so far: 24 properties, 84 tenants
• A lasting legacy for the future
• Social impact report: increased confidence, independence, learning new skills, wider social network, participation in the community and better health. Much improved health of the parents
Risks
• Rental income stream: voids, housing benefit
• Net asset covenant
• Ability to re-finance in 2021
• Cost control: maintenance, interest rates, inflation
Innovation
• A new way of harnessing substantial private money for public good
• Many more social organisations can use the RCB platform
• Shows private investment institutions and individuals how to invest for good
• Real alternative and addition to public grants and conventional private loans
• Capable of being replicated on a much greater scale
Get in touch
Alastair Graham, Director
Call 0300 0037 007
Email [email protected]
Twitter @alastair234
@GoldenLaneHouse
#GLHBond14