Minerva Lending – unregulated loan notes offering up to 7% per annum over 5 years

Minerva Lending plc offers unregulated loan notes paying 3.5%pa over 2 years, 4.5%pa over 3 years,  5.5%pa over 4 years or 7%pa over 5 years.

Status

Open to new investment.

Who are Minerva Lending plc?

directors
Dr Reeves Knight (top) & Ross Andrews (bottom), Minerva Lending plc directors

Minerva Lending plc should not be confused with the much larger and older property group, Minerva Limited. As far as I can tell there is no connection.

In the company’s investment literature, the directors are identified as Dr Reeves Knight and Ross Andrews.

At time of writing Minerva is two weeks late filing its ownership details (“confirmation statement”) with Companies House. The December 2016 confirmation statement shows that the company is (or was at that time) wholly owned by Dr Phillip Reeves Knyght.

Minerva Lending was incorporated in February 2016. The December 2016 accounts, the first filed, show net assets of approximately £2 million.

How secure is the investment?

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

Minerva Lending lends investors’ money to other companies for the purpose of commercial property acquisition or development.

If Minerva’s borrowers fail to pay sufficient interest to Minerva, there is a risk that Minerva may default on its payments to investors.

Investors’ money is secured by a first charge over Minerva Lending’s rights in respect of the loans funded by their money, including any related security.

Before relying on this security, it is essential that investors undertake professional due diligence to ensure that in the event of a default, that these securities are valuable and liquid enough to raise sufficient money to compensate investors if needed, and that Minerva Lending’s rights over these securities are watertight.

Investors should not assume that because the loans are asset-backed, they are guaranteed to get at least some of their money back through sale of the collateral if the issuer defaults. Investors in asset-backed loans have been known to lose 100% of their money when it turned out that the collateral was insufficient to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in Minerva Lending, only illustrating the risk that exists with unregulated corporate loan notes even when they are asset-backed.

Minerva Lending plc’s literature emphasises that investors are not covered by the Financial Services Compensation Scheme.

Should I invest with Minerva Lending?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

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 7% per annum yields should be considered high risk. As an individual security with a risk of total and permanent loss, Minerva Lending’s loan notes are 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, after the adminstrator deducts their fees.

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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