Alternative finance, or Alt-Fi to those in the know, is an increasingly popular way for companies to raise much-needed growth finance while at the same time allowing investors to benefit from some relatively strong returns.
Mini bonds, Social Impact Bonds, charity bonds, peer-to-peer, crowdfunding, community shares and the like all make up an increasingly diverse and growing sector collectively known as alternative finance or innovative finance.
With the impending launch of the new Innovative Finance ISA we can expect even more interest in this new sector.
Given interest rates remain stuck in the doldrums and it looks likely this won’t change for a while, alt-fi investments can offer better-than-cash returns over a set time period. Notwithstanding usual risk warnings, of course!
We’ve rounded up 3 tempting offers below.
- Bristol-based independent retailer of organic, local, ethical and fair trade goods Better Food Company is looking to raise £350,000 through a bond issue offered by Triodos Corporate Finance. The funds will be used to open a new shop and café at Wapping Wharf, in the up and coming Harbourside area of Bristol, by May 2016.
Investors can earn 7% per year over the five year term of the bond and also benefit from a 10% store discount card. The minimum investment is £2,000 and the bonds are transferable but not listed on any investment exchange. The offer is due to close on 1 April and is available at www.betterfood.co.uk/bondoffer or by calling Triodos on 0117 980 9593.
2. London Community Land Trust (London CLT) is looking for investment to develop a scheme to build affordable housing for local families in Lewisham, London, as well as accelerate plans to develop 100 more homes at the Olympic Park site.
3. Southill Community Energy (SCE) in David Cameron’s constituency of Charlbury, Oxfordshire, is offering investors the chance to buy shares to develop a solar farm. This is one of the last community share offers available for investment following government changes to the Feed-In-Tariff. SCE are hoping to raise £3m to complete the solar farm build.
The share offer aims to offer a return of 5% per year over the 25-year life of the 4.5MW solar farm. The minimum investment is £250. SCE will also look to return £750,000 to the local community by way of schemes to reduce fuel poverty, increase energy efficiency and reduce carbon emissions, as well as refurbish Charlbury Corner House. The share offer is due to close on 8 April and is available via www.ethex.org.uk/SCE.