27th June 2014
Charity Mencap has launched its first retail charity bond offering a return of 4.375% over seven years.
The housing arm of the learning disability charity, Golden Lane Housing, plans to use the money raised to build 30 homes for 100 people with learning difficulties
The bond is the first to be launched through the Retail Charity Bonds platform which has been created to enable charities to raise medium-term debt through bond issues. Bonds are a type of IOU that sees investors lend money to a company or charity in exchange for a twice annual return, known as a coupon, and the return of their original investment after a set period.
The Golden Lane bond will pay a coupon of 4.375% twice yearly – on 29 January and 29 July – until 2021. The charity has not said how much it plans to raise through the bond issue but the initial subscription is £500, which has been set at a low bar ‘to ensure Golden Lane Housing supporters and other individual retail investors can participate’.
The bonds will be listed on the London Stock Exchange’s Order Book for Retail Bonds which means they can be sold on the secondary bond market should you need to get your money back, although the market will determine what price you get for the bond so you may lose money.
Mencap said one of the biggest challenges facing people with learning disability in the UK is a lack of access to suitable accommodation and due to the chronic housing shortage in the UK a number of people with learning difficulties live in unsuitable accommodation.
The charity provides housing for over 1,300 tenants with learning disability and has built up an £83 million property portfolio comprising 400 freehold and long leasehold properties.
Alastair Graham, director of Golden Lane Housing, said: ‘We are delighted to be the first bond to be issued via the newly created Retail Charity Bonds platform. The bond will enable Golden Lane Housing to invest in much-needed housing for the people with a learning disability that are currently living in housing that does not meet their needs, in the wake of a nationwide housing shortage.
‘The houses and bungalows purchased from the proceeds of the bond will provide a position and lasting legacy for people as well as future generations with a learning disability.’