Godwin Capital – unregulated bonds paying up to 11.3% per year

Godwin Capital is offering 2 year investment bonds paying either 10% per year with income paid out twice a year, or 11.3% per year if income is rolled up and paid at the end of the term (12% simple interest rolled up for two years = 11.3% compounded annual growth rate).

Who are Godwin Capital?

The bond is issued by Godwin Capital No. 2 Limited. This company is wholly owned by Godwin Capital Limited, which is in turn owned by the parent company, Godwin Property Holdings Limited. Godwin Property Holdings Limited was incorporated in June 2016.

directors
Clockwise from top right: directors and owners Richard Johnston, Andrew Mitchell, Stephen Pratt and Stuart Pratt.

The parent company is owned in equal quarters by the directors Stuart Pratt, Stephen Pratt, Richard Johnston and Andrew Mitchell.

 

The parent company’s last accounts (31 December 2016) show net assets of £94, while Godwin Capital No. 2 has not yet filed its first accounts.

 

How safe is the investment?

These investments are unregulated corporate loans and if Godwin Capital No. 2 defaults you risk losing up to 100% of your money.

The purpose of the bonds is to allow Godwin Capital No. 2 to lend to other Godwin companies in the group, which in turn will invest bondholders’ money in property.

If Godwin’s sister companies fail to make sufficient returns from their property investments, resulting in them defaulting on the intercompany loans, or for any other reason Godwin Capital No. 2 runs out of money to service these bonds, there is a risk that they may default on payments of interest and capital to investors.

Asset-backed security

A legal charge over Godwin Capital No. 2’s investments will be held by a Security Trustee (More Group Capital Services Limited). These investments will consist of loans to other Godwin group companies.

The Security Trustee will also hold a first legal charge in respect of funds provided under inter-company loan agreements.

Investors should not assume that because their loans are secured on these assets, 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 (e.g. Providence Bonds and Secured Energy Bonds) 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 Godwin Capital, only illustrating the risk that is inherent in unregulated corporate loan notes even when they are asset-backed.

If investors plan to rely on this security, it is essential that they undertake professional due diligence to ensure that in the event of a default, these securities are valuable and liquid enough to raise sufficient money to compensate all investors, as well as any other creditors that Godwin Capital has borrowed money from.

This will require due diligence on the legal charges held not only over the assets of Godwin Capital No. 2 (which are intercompany loans) but on the legal charges over the physical propertes that Godwin group companies are to invest in.

Should I invest with Godwin Capital?

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 10% per annum yields should be considered very high risk. As an individual security with a risk of total and permanent loss, Godwin Capital’s bonds are higher risk than a mainstream diversified stockmarket fund.

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 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 and any higher-ranking borrowers are paid.

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 a “guaranteed” investment, you should not invest in unregulated products with a risk of 100% capital loss.

9 thoughts on “Godwin Capital – unregulated bonds paying up to 11.3% per year

  1. You talk of Providence Bonds and Secured Energy Bonds in the same sentence as Godwin who as i understand it are a £400m GDV property company.
    They build for many high street corporates and i will guess the directors are well established in this sector, from 2007 and do you mention any of that, NO!
    They are SIPP approved are they not.

    As an example i have had £200k in Dolphin and out and will be paid out £50k + bonus in July.
    9% on year 1 and 22% on two years.

    You also state that 10% is almost unheard of in the investment world.

    As a regular contributor to the FT advisor, what i see is a group or an individual who is trying to tar everyone with the same brush. Or are you angry, jealous or a competitor?

    I agree that 80% of your entries and comments are probably quite truthful. I think you left out storage and car parks, but one company based in Liverpool who’s directors are also a financial media company, are offering “upfront” 15% and add in agents commision 5-10% i guess, how does that work.

    Try telling the truth directly not missing anything out and remember both Dolphin and Godwin had FCA compliance officers sign them off!

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  2. You talk of Providence Bonds and Secured Energy Bonds in the same sentence as Godwin who as i understand it are a £400m GDV property company.

    They are mentioned in the same sentence because all three are/were issuing unregulated bonds with a risk of 100% loss. No other connection is implied.

    The issuer of this bond is Godwin Capital No. 2 Limited which is an entirely new company, which has not yet filed accounts. The development value of other Godwin projects is of no relevance to investors unless their bonds are secured on these assets, which is not asserted in the literature.

    They build for many high street corporates and i will guess the directors are well established in this sector, from 2007 and do you mention any of that, NO!

    Because it’s of no relevance to the risk profile of the investment.

    They are SIPP approved are they not.

    Investments are not “approved” by anyone for investment in SIPPs. An investment may be eligible or ineligible for holding in a SIPP according to HMRC rules. This does not constitute approval by anyone, and has no relation to the likelihood of success or failure.

    You also state that 10% is almost unheard of in the investment world.

    No I didn’t.

    I agree that 80% of your entries and comments are probably quite truthful.

    I think you left out storage and car parks, but one company based in Liverpool who’s directors are also a financial media company, are offering “upfront” 15% and add in agents commision 5-10% i guess, how does that work.

    All the reviews are based either on literature issued by the investment providers or on publicly available information. Feel free to point out the 20% that is incorrect and why. Do also feel free to email me details of the media company, which I’ll happily review if they’re an unregulated investment offering to the public.

    Try telling the truth directly not missing anything out and remember both Dolphin and Godwin had FCA compliance officers sign them off!

    I haven’t reviewed Dolphin (yet) so I don’t know what relevance you think they have.

    FCA compliance officers do not “sign off” any investment, let alone unregulated ones.

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  3. Great website, but I guess ALL have to understand one thing. READ ALL the material, study the business plans and then if it doesn’t make sense, you can’t see the security, you can’t afford to lose the capital – DON’T do it!

    I am concerned that Simon Morris above may be this guy though (might not be too!)

    [BrevEdit – he isn’t, see below.]

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  4. Morris’ reference to being a regular FT Adviser commenter suggests he is Simon Morris of CMS Cameron McKenna, no relation to the Leeds United director.

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  5. Ollie is no where to be found and as been identified as a tyre kicker and potentially a bit of a BS er.
    So Ollie who are you?
    We all know about the various Simon Morris, but Ollie, no where to be found!

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  6. Explain how if an investor places an investment via their SIPP, who in the Pension Fund Trustee approves the investment.
    So if it’s not an FCA compliance officer, who is it.
    I believe you are a private individual with an opinion only.
    Maybe you can confirm your credentials in commenting on investments.

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  7. Explain how if an investor places an investment via their SIPP, who in the Pension Fund Trustee approves the investment.

    The SIPP provider will decide whether to accept the investment into the SIPP. If the investment is not “permitted” by HMRC, it could in theory still purchase the investment. But as it would be subject to draconian tax penalties, in practice the vast majority of SIPP providers will refuse to accept it.

    If a SIPP does purchase a non-permitted investment, in due course – possibly years later – an HMRC tax inspector will investigate and apply penalties.

    So the answer to who “approves” an investment in a SIPP is primarily HMRC , and secondarily the SIPP provider (who decide whether to accept the investment partly based on what they think HMRC will say). At no stage are FCA compliance officers involved. The regulatory system in the UK regulates individuals and companies, not products. FCA compliance officers do not “sign off” any investment product.

    But this is all a side issue as I never suggested that Godwin Capital’s loan notes were ineligible for SIPP investment. They clearly are eligible (unless the SIPP member works for Godwin Capital). The question of whether an investment is permitted in a SIPP has absolutely nothing to do with the investment’s risk profile.

    Maybe you can confirm your credentials in commenting on investments.

    No, I think I’m quite happy to let our respective knowledge of the UK regulatory system speak for itself.

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  8. I disagree with your comments.
    [BrevEdit: Off-topic allegations about unrelated investments removed.]
    But I disagree and I have personal experiance as to the criteria, of getting an investment approved buy a SIPP company.
    All relevant documents as to the trading of a company it’s projects shareholders, Directors, it’s contractors, it’s red book RICS valuation, go to the compliance officers of the SIPP Trustee.
    And these compliance officers are always FCA regulated.
    Forget what happened 10 years ago, but look at the market place over the last 2 years.
    Because SIPP’s now require as you know an IFA sign. Assuming it pasts the extremely rigorous due diligence from, yes, the Trustee SIPP compliance officer.
    [BrevEdit: Off-topic allegations about unrelated investments removed.]
    So my issue with your reporting is you don’t do your research, you clearly don’t understand this unregulated market, for sure you have never put your money where you mouth is and taken a development risk and anything associated with your web site makes brands such as Godwin and Dolphin and a few other credible others look suspicious for no reason.
    If you are an IFA well that answers a lot of questions.
    But I am a HNW and investor and I actually know what I am talking about. Facts not fiction or just opinions!!

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  9. A James Hay or AJ Bell or SIPPs R Us compliance officer is not an FCA compliance officer.

    You stated that Godwin Capital’s investment had been approved by an FCA compliance officer, which is not correct. Pretending you were talking about compliance officers working for an FCA-authorised company isn’t going to change that.

    The above review in a nutshell says that Godwin Capital is a high risk unregulated investment which poses a material risk of 100% loss, and is therefore only suitable for risk-seeking investors as a small part of their portfolio. If you think any of that is incorrect then feel free to say why, instead of waffling on about totally unrelated investments.

    Some SIPP providers are more liberal than others, and the fact that a compliance officer for an unspecified SIPP provider has accepted the investment into its SIPP has absolutely nothing to do with its risk profile.

    anything associated with your web site makes brands such as Godwin and Dolphin and a few other credible others look suspicious for no reason.

    I have absolutely no clue where you get that idea. This site reviews unregulated investments. Godwin Capital is an unregulated investment. I have cast no suspicions on Godwin whatsoever. If you think Godwin looks suspicious then that idea has come entirely from your own head, and it is up to you to justify why you think they look suspicious.

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