Fuzzy Brush Products is offering unregulated one- and two-year bonds (described as “redeemable shares”) paying up to 12.43% per annum interest over one year and 14.43% per annum interest over two years.
The returns are dependent on the amount invested:
- 1-year bonds: 9% for investments up to £5k, 10.7% for investments up to 10k, and 12.43% for investments up to £25k.
- 2-year bonds: 11% for investments up to £5k, 12.7% for investments up to £10k and 14.43% for investments up to £25k.
£25k is the maximum that may be purchased per investor. Fuzzy Brush are seeking to raise a total of £400,000 in this round of fundraising.
Who are Fuzzy Brush Investment?
Fuzzy Brush Investment states that the business dates back to 1996 when the founder James (Jim) Drew first came across a similar product in Amsterdam.
The redeemable shares appear to be issued by Fuzzy Brush Products Limited, which was incorporated in December 2008. James Drew is the sole director and owns 100% of the ordinary shares in the company. The redeemable shares offered to investors have no voting rights.
A chart of sales figures states that retail sales of Fuzzy Brush started in mid-2013.
Fuzzy Brush Products Limited’s last accounts (December 2016) were filed under the small companies regime, which means that they did not provide a profit and loss statement or require auditing. They show net assets of £1.3 million.
Fuzzy Brush has been promoted in the Daily Express in an article described as “Sponsored by Fuzzy Brush”. The advertorial mostly trumpets Fuzzy Brush’s recent growth and job creation, but promotes its bonds in the last paragraph, including the 14.43%pa rate and a notice that the bonds are only suitable for high net worth and sophisticated investors (how many of the Daily Express’ readership qualify is questionable).
Fuzzy Brush is also promoted via theinvestorcrowd.co.uk, a platform run by Nick Lomax. Nick Lomax was banned from being a company director in 2014 for being involved in a fine wine investment fraud. There is no suggestion that Lomax is breaching his ban or doing anything else illegal by promoting Fuzzy Brush.
How safe is the investment?
These investments are unregulated corporate loans and if Fuzzy Brush defaults you risk losing up to 100% of your money.
Buzzy Thrush… er, Fuzzy Brush (sorry, it’s surprisingly difficult to say that name several times quickly) is a small start-up company. As with any company, no matter how large or small, if Fuzzy Brush fails to make sufficient income after costs from its disposable toothbrushes, or for any other reason Fuzzy Brush runs out of money to service these bonds, there is a risk that they may default on payments of interest and capital to investors.
Should I invest in Fuzzy Brush bonds?
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 up to 14.43% per annum should be considered very high risk. As an individual security with a risk of total and permanent loss, Fuzzy Brush’s bonds are higher risk than a diversified portfolio of mainstream stockmarket funds.
Before investing investors should ask themselves:
- How would I feel if the investment defaulted and I lost 100% of my money?
- Do I have a sufficiently large and well-diversified portfolio that the loss of 100% of my investment in Fuzzy Brush would not damage me financially?
If you are looking for a “safe” investment, you should not invest in in unregulated securities with a risk of 100% capital loss.