The High Street Group

The High Street Group offers unregulated loan notes paying 18% after 18 months (11.66%pa compounded) or 5% every 6 months for 18 months (10.28%pa IRR).

The investment is not advertised via The High Street Group’s website but is publicly available on introducers’ websites.

Status

Open to new investment.

Who are High Street Group?

gforrest
Gary Forrest, High Street Group Chairman

High Street Group’s leadership is detailed on its website. Gary Forrest is the Chairman and owns 100% of High Street Grp Ltd, the parent company.

The investment literature states that the group was founded in 2006 but Companies House shows that High Street Grp Ltd was only founded in 2011. The High Street Group’s website was registered in November 2010.

The business appears to have taken off in the last few years, with net assets rising from £22,000 in the December 2015 accounts to £26 million in December 2016. This increase is primarily due to Investments of £26 million being recorded in 2016 vs nil in 2015. These investments are indicated to be High Street Group’s various subsidiary companies in the notes to the accounts.

The investment literature claims that the group made 26 million profit in 2016 and has 100 employees. This is curious, because that level of profit and workforce would require the group to file full accounts with Companies House, yet High Street Grp Ltd’s last accounts (30 December 2016) were filed under the small company regime. This means the accounts did not have to be audited or display a profit and loss statement.

How secure is the investment?

These investments are unregulated corporate loans and if High Street Group defaults you risk losing up to 100% of your money.

Investors’ money is secured against the assets of the group – specifically a “debenture over High Street Commercial Finance Limited” (one of HSG’s subsiaries) “along with a Corporate Guarantee from the group of companies”.

Before relying on this security, it is essential that investors undertake professional due diligence to ensure that in the event of a default, that their charge against the group’s assets is propertly recorded, and that the security is valuable and liquid enough to raise sufficient money to compensate investors.

Should I invest with High Street Group?

As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering 11.66% per annum yields should be considered very high risk (i.e. higher risk than a diversified portfolio of stockmarket funds).

This particular bond is described as asset-backed. Before relying on the security backing the bond, investors should undertake professional due diligence to ensure that a) the security exists b) in the event of default, the security could be easily sold and would raise enough money to compensate all the investors c) their charge over the security will be properly and legally recorded.

Before investing investors should ask themselves:

  • How would I feel if the investment defaulted, the sale of the security failed to raise  enough money to compensate all investors, and I lost 100% of my money?
  • Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
  • Have I conducted due diligence to ensure the asset-backed security can be relied on?

If you are looking for “security”, you should not invest in unregulated products with a risk of 100% capital loss.

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22 thoughts on “The High Street Group

  1. Hello There. I have a problem with the high street group article? Is states that the company is unregulated – which is true. However, you have failed to mention Castle Financial Trust who both work on behalf of HSG’s investors and is both FCA and FSCS regulated? A company which will liquidate any assets of the company fails to make payment. What you also failed to mention in that the 15 years HSG has been alive, they have a 100% track record with every single penny been paid back to investors. Maybe you should get ALL the facts straight before you right an article like this.

    I would imagine you might want to amend this now. Thank you

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  2. Is states that the company is unregulated – which is true.

    Good start.

    However, you have failed to mention Castle Financial Trust who both work on behalf of HSG’s investors and is both FCA and FSCS regulated? A company which will liquidate any assets of the company fails to make payment.

    There is no such firm on the FCA register. And no such thing as “FSCS regulated”.

    An unregulated loan note issued by an unregulated company is an unregulated investment. Whatever FCA-regulated firms it may employ for ancillary duties is irrelevant.

    What you also failed to mention in that the 15 years HSG has been alive, they have a 100% track record with every single penny been paid back to investors.

    This oft-parroted cliche is completely meaningless. If they didn’t have a 100% track record they wouldn’t be soliciting investment.

    And added to that, the company soliciting investment (High Street Grp Limited) was only incorporated in 2011 (and was dormant until 2013), and its website domain was registered in 2010. There is no evidence that it existed prior to those dates.

    Maybe you should get ALL the facts straight before you right an article like this.

    Feel free to tell me which facts I haven’t got write.

    I would imagine you might want to amend this now.

    You imagine wrong.

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  3. https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000000NMRMAAA5

    If you follow this link you will find that Castle Trust is in fact on the FCA register list. What you also wouldn’t know is that every single payment gets paid into Castle Trust before being transferred to HSG. This way Castle Trust are able to record every single transaction so whenever a financial body wishes to investigate the company financial – which they have multiple times – everything is above board and protected. I hardly think there is a likely hood of a £100,000 investment couldn’t be paid back using 69 million in assets.

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  4. If the company is so keen on multiple financial investigations, why does it not have its annual accounts audited?

    And why is High Street Commercial Finance Limited, the issuer of the loan note, four months overdue with its accounts?

    The company’s claims as to its financials are of no value from a due diligence perspective if they are not independently audited. No sensible lender lends their money based solely on what the borrower claims about their ability to pay.

    The fact that investors’ money goes in and out of a payment processor is similarly irrelevant.

    If High Street Group runs out of money to service its debts – an inherent risk with any loan to a micro-cap small company – the payment processor will most likely walk away, saying it isn’t being paid. Alternatively it would appoint administrators, which the creditors could do for themselves. The FSCS does not apply here.

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  5. The fact that the accounts are late pays no risk to the investors. The clients have a first legal charge on their investment, meaning HSG pay their investors before anyone else. Plus all investors are self certified – this isn’t just an investment for the general public. They do business with a very niche market of sophisticated investors.

    If HSG runs out of money? Yeah, I’m sure all those 69 million assets are just suddenly going to disappear? Their mutiple steams of liquidity plus their long list of assets is by far enough keep paying back returns.

    Obviously HSG themselves aren’t going to be FCA approved because they are in the property sector; they aren’t a financial body. Which is why we have Castle Trusy in place. FCA approved companies can still be cowboys. Even the biggest FCA approved companies make mistakes; the banks are the biggest cowboys in the market!

    Being FCA approved doesn’t even guarantee that you’ll get compensated. Which is obviously where the FSCS step in; who of which can compensate you. The security on this is so high and so important; which is exactly why HSG require all investors to be self certified first, and that they don’t offer this to the general public.

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  6. The fact that the accounts are late pays no risk to the investors.

    Well that’s alright then.

    The clients have a first legal charge on their investment, meaning HSG pay their investors before anyone else. Plus all investors are self certified – this isn’t just an investment for the general public. They do business with a very niche market of sophisticated investors.

    In which case I’m not sure why a blog pointing out what all your sophisticated investors will already know about the high risk nature of these investments is such an issue for you.

    If HSG runs out of money? Yeah, I’m sure all those 69 million assets are just suddenly going to disappear? Their mutiple steams of liquidity plus their long list of assets is by far enough keep paying back returns.

    Let’s be clear here, are you saying that no company with £69 million in assets can go bust?

    In any case, the issuer here is High Street Commercial Finance which has gross assets of c. £22.5m and net assets of £892k according to its most recent (and moth-eaten) accounts from Dec 2016.

    Being FCA approved doesn’t even guarantee that you’ll get compensated. Which is obviously where the FSCS step in; who of which can compensate you.

    Let’s be clear here, in exactly which circumstances are you saying the FSCS will compensate investors in High Street Group’s loan notes?

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  7. HSG have an estimated £700 million worth of developments in the pipeline for the next 2/3 years. There’s an extremely unlikely possibility of HSG going under with these plans in place. In case of a default in payment, Castle Trust will either refinance the properties with the bank so they can afford to pay clients, or even sell the buildings to make payments. There are multiple ways of ensuring payment for investors.

    And even in an unrealistic scenario that HSG for whatever reason do have to declare bankruptcy anytime soon, their massive residential buildings, chain of hotels and bars, homes all still have a value, and which would all be sold. Like I mentioned, the clients all still hold the 1st legal charge and will always be paid first no matter what.

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  8. High St Group are stating they have a 100% track record of paying back investors my loan note was due to mature in March but High St Group have defaulted on this and exercised the right to extend this by 6 months. When i contacted them as to why i would not be paid on time they said it was due to planning permission.

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  9. Curious. If HSG have £700 million worth of developments in the pipeline then why would one particular project meeting planning permission problems prevent HSG returning investors’ capital on time? No doubt Louis will be able to clarify.

    Planning permission problem is only the first stage in a retail development so how much is an extra six months’ going to help? How likely is it that even if planning permission is granted tomorrow, HSG can get the development built and ready for sale or refinance within six months?

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  10. I have been looking into investing with this company for the past 4 months. Reading through the above blogs it makes me slightly nervous to read that Paul Davies has not received a return. It does not fill me with confidence to move forward. Is their anyone on here who can support if this is a good or bad investment and why?

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  11. Paul Davies – is this the first year anniversary for you? Have you been investing in HSG for some time (without issues) or is this your first year?

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  12. Funny that. Louis has vanished!

    69 million in assets does not mean anything when the debt outweighs the asset value and considering that none of their assets have actually reached practical completion and they have been raising funds from investors blindly for years, paying upwards of 25% commission per sale to 3rd party brokers like FJP Investment, 18% – 22% per annum to investors means their liabilities massively outweigh their asset value.

    Also worth noting, is that all of their “asset value” is based on Director’s valuations – I am no Accountant but even I can see that in their financials. Not one completed development, and all their “guaranteed” figures based on valuations – when the residential sector sees a plummet in property value I think they are going to be unstuck.

    My understanding based on assets of £69m and that combined with their turnover claims would mean they need to audit no? Pretty sure its a breach of HMRC and Companies House ruling to file small company accounts when you are not a small company??

    Please enlighten me if I am wrong there.

    Lastly, I find it very difficult to understand how hundreds of investors ALL hold a first charge? Firstly, its called a first charge for a reason, are the banks or high street lenders not involved at all? Because the charges on Companies House beg to differ, and also what kind of investment with a first charge on an “operational asset” pays 18%?!?

    Its actually quite laughable really.

    Has anyone actually invested with these people and seen a successful investment, again purely out of curiosity?

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  13. I’m having a lot of trouble with the arguments being presented in these comments to this blog.

    Louis Jan 31st: “you have failed to mention Castle Financial Trust who both work on behalf of HSG’s investors and is both FCA and FSCS regulated?”

    Louis Feb 1, “Plus all investors are self certified – this isn’t just an investment for the general public. They do business with a very niche market of sophisticated investors.”

    The FSCS reference is a complete red herring in my opinion. As Brev stated, there is no such thing as FSCS “registered” anyway but investors are most likely not permitted to access the FSCS.

    My question also, is who gave the financial advice – if any? Castle Trust Capital plc, FCA registered number 541910 appears the have limited permissions that do not include, as far as I can tell, giving of investment advice. So I guess it wasn’t them. My other question is whether the investors really are “sophisticated”? There are clearly defined legal criteria for “sophisticated” and for the self certification process in the FSMA 2000 (Financial Promotion) Order 2005 No. 1529, Schedule 5, Part 2 – http://www.legislation.gov.uk/uksi/2005/1529/schedule/5/made – and the legislation specifies “the statement to be signed … must be in the following form and contain the following content” and goes on to list two parts. The first part is the investor’s understanding of 4 things, a) – e) which contains statement that you may lose significant rights such as Ombudsman Services and the FSCS. The second section then includes 4 things that define you as “sophisticated” and only one needs to apply. So I question whether investors are “sophisticated” or simply asked to sign they were but don’t meet the criteria – this has been shown to be the case in some high profile pension scams – like Capita Oak, Henley and Westminster. Mr. N in PO-12763 learned he had signed as sophisticated but in fact was not.

    I imagine Castle Trust did not provide investment advice. Their permissions appear to be an “execution” only. So FSCS would only apply if they contravened their authorised permissions, for example if they loaned investors money to their own business and then went bust then I feel the FSCS would be applicable because that is a direct contravention of FCA rules. They are not permitted to invest client money in their own business. Since I assume they are not contravening their authorised permissions I guess their FCA registration and reference to FSCS is completely irrelevant to investors and I am sure sophisticated investors would know this – which is why I question if they really are sophisticated.

    One person commenting, Paul Davies Feb 11, is an investor so it would be useful if Paul could confirm he is/was “sophisticated” and had signed a statement in the form set out by the legislation and was he advised by an FCA regulated adviser permitted to give investment advice?

    Another argument above, Louis feb 4th, that holds absolutely no credibility whatsoever is: “HSG have an estimated £700 million worth of developments in the pipeline for the next 2/3 years. There’s an extremely unlikely possibility of HSG going under with these plans in place.” Carillion – https://en.wikipedia.org/wiki/Carillion – could probably have used the same argument and look what happened there.

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  14. Thanks for your findings. I decided to take this apart and investigate if it’s worth an investment, but you guys, among other facts, have convinced me that is it not. Thank you.

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  15. Thankyou to Brev for an excellent article and for providing responses to the ridiculous challenges made.

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  16. I have invested in the HSG. My loan note which was due in March has reached an extension of 6 months.I am still waiting for it. I was dealing with their agent Direct Property. One day I received an email directly from HSG stating they are going to stop Loan notes, and give investors an option to convert their money into equity. It is an option for investors either to opt out or go ahead – condition being they will receive dividends for their shares at the end of the anniversary date (end of each year) at 12%. This is the latest news.

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  17. So what do investors get in exchange for converting their debt into equity?

    Converting debt into equity has two important consequences:

    1) HSG is no longer responsible for returning their money. To get their capital back, investors have to sell their HSG shares, which may be difficult if not impossible, as HSG is an unlisted micro-cap company.

    2) HSG no longer has to pay them interest. Dividends are paid at the discretion of whoever controls the company, in contrast to loan interest which is a legal obligation. And dividends can only be paid if the company is profitable. (This is assuming debt is converted into ordinary shares.)

    So what do investors get in exchange for taking on that extra risk? The interest on HSG’s loan notes is already almost 12%pa.

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  18. I have invested in HSG. First anniversary will be 7th Sep 2019 where i am due 12% interest on my loan note. If I opt out of converting my debt to shares is my loan note investment at risk?

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  19. Less pedantic answer: one potential reason for a company offering a debt-equity swap is that the company is not going to be able to return bondholders’ money on time. Converting the debt to equity allows the company to avoid default and liquidation, while the investors hope that eventually they will be able to sell their shares to recover their capital.

    Whether this is the case with HSG I don’t know. In part due to the failure of High Street Commercial Finance to file accounts on time, their current financial position is not publicly known.

    What reason have they given for why investors should convert their debt into shares?

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  20. I was about get involved in this shit… thanks guys.. all the best to those who invested and trying to get their money back…

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