Providence Bonds - 8.25%

Toyota66

I received this e-mail from Moneywise:-

Invest before 15th January 2015 and receive interest from the date of investment.

As a means of funding its UK-based factoring initiative, Providence Bonds plc, the UK subsidiary of Providence Global Limited, is issuing a minibond that has a term of 4 years, an interest rate of 8.25% per annum and a target raise of £25m. Investors can invest from £1,000 upwards and are paid interest quarterly.

Providence is a global finance, trade and consumer group with its headquarters in London. Providence Bonds plc aims to establish a factoring business in the UK using the extensive international experience of the group and its existing products.

Would you recommend this?

Thrugelmir

Are you prepared to take the risk of losing your capital?

jimjames

What other investments do you have or did you think this was a savings account?

ColdIron

An investment tip from Moneywise? I don't think so

bryanb

Toyota66 wrote: »

Would you recommend this?

No, using the "If it looks too good......." rule

colsten

Sounds there is no bank or professional investment house that would lend them £25m at less than 8.25% for 4 years. That's probably because their business plan is loaded with unknowns.

Why would you assume a risk that none of the professionals is prepared to take?

EDIT: Doesn't take a lot of googling to find information like this: http://www.fixedincomeinvestor.co.uk/x/forum.html#/discussion/271/providence-mini-bond-8-25-over-4-years. Bargepole stuff, without a shadow of a doubt.

Thrugelmir

colsten wrote: »

Sounds there is no bank or professional investment house that would lend them £25m at less than 8.25% for 4 years. That's probably because their business plan is loaded with unknowns.

A new business.

Providence Bonds plc aims to establish a factoring business in the UK using the extensive international experience of the group

doe808

Why would a business with such a seemingly international presence need to raise funds from uk individuals? Hmm.

colsten

Thrugelmir wrote: »

A new business.

A new business doesn't automatically make a good business plan or a valid business proposition. And is what they say they are planning to do with the money they raise actually a new business, or just a new firm? What research have you done into what it is they are proposing, and what their intended customers say about the business proposition? What research have you done into the parent company of the proposed new business? I am not saying I have done a lot of research into these guys myself but there wasn't anything that I found that could convince me they are worth further research.

Comes back to what I asked earlier: why can't they raise their required capital from banks and investment houses?

Reaper

From a small look I don't think it is quite as bad as the responses here suggest. There does appear to be a reasonable guarantor in the parent company. However you would have to research it properly to try to judge whether the level is risk is worth the promised returns.

colsten

Reaper wrote: »

There does appear to be a reasonable guarantor in the parent company..

Have you got any link to the published accounts of the parent company?