Satchi Wealth is offering three-year unregulated bonds paying interest as follows:
- 8.5% per year for interest paid monthly
- 9.5% per year for interest paid annually
- 11% per year if interest is rolled up and paid out at the end of the term
A reader has reported being cold-called by an individual offering Satchi Wealth investments.
The investment literature for the bond is “orphaned” on Satchi’s main website (i.e. there are no links to it) but is made publicly available on a page accessible via Google.
Who are Satchi Wealth?
Satchi Wealth is described as a marketing and distribution division of Satchi Holdings plc. Satchi Holdings plc was incorporated in February 2019 while Satchi Wealth Ltd was incorporated as Investorwise International Limited in April 2018 by Jason Weeks, Clare Murphy and Paul Dodds in April 2018. Jason Weeks gave up his shares in Investorwise to Murphy and Dodds in May 2018; the two remaining owners then transferred the company to Satchi Holdings plc in April 2019. Paul Dodds remains the sole director of Satchi Wealth Ltd at time of writing.
Satchi Holdings plc is owned 50/50 by Jennifer McQueen and Danielle Mearns. Danielle Mearns resigned as a director in March 2019. Andrew Murray Smith and Michael Haston were appointed directors in March 2019.
At time of writing, Satchi Holdings’ website provides very sketchy details of its directors’ background. Particularly of note is Haston’s biography which states “Michael comes from private equity background and has been instrumental in accelariting [sic] the growth of various successful large-scale entities. Michaels [sic] key areas of expertise are Financial [sic] modelling and acquisitions”.
The company has claimed in a statement to Companies House that there is no registrable person or entity with control over the company. This appears to contradict its incorporation documents which declare that McQueen and Mearns each have 50% shares.
Satchi Wealth’s founder Jason Weeks was formerly a director of XG Concept Ltd from December 2010 to June 2015. In January 2015, XG Concept was investigated by HMRC and later alleged to have falsely claimed £360,240 in VAT Relief. Since January 2018 Weeks has been the sole director of Crypto Currencies Ltd and Crypto Currency Centre Ltd. It should be emphasised that after giving up his shares in May 2018, Weeks currently has no public connection with Satchi Wealth.
How safe is the investment?
Satchi Holdings’ website describes its business as “Property Asset Management” and “Asset Based Lending”. Under the second heading, it states
Every loan that Satchi makes to a company, is backed by security. What we mean by security, is strong underlying assets within the company which is seeking the loan.
Satchi then securitise the assets of the company by way of a legal charge, this in turn secures our business to business loans within the market and ensures that Satchi’s capital is secure.
It is important to understand that if Satchi Wealth is unable to make sufficient returns from its investments in leasing projects, or for any other reason runs out of money to service its bonds, investors risk losing up to 100% of their money.
Secured lending on property is not risk-free as there is a risk that if the underlying borrower defaults, the security cannot be sold for enough to cover the loan.
Investors in asset-backed loans have been known to lose 100% of their money when it turned out that there were not enough assets left 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 Satchi Wealth, only illustrating the risk that is inherent in any loan note even when it is a secured loan.
If investors plan to rely on this security, it is essential that they hire professional due diligence specialists (working for themselves, not Satchi) to confirm that in the event of a default, the assets of Satchi would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Satchi tells them about their assets.
This is especially important as it appears that investors are lending to Satchi Wealth Ltd, whereas it is Satchi Holdings that owns any property invested in.
Should I invest in Satchi Wealth?
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 individual loan note to an unlisted micro-cap company, 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 returns of up to 11% per year is inherently very high risk. As an individual, illiquid security with a risk of total and permanent loss, Satchi Wealth’s loan notes are much higher risk than a mainstream diversified stockmarket fund.
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 portfolio that the loss of 100% of my investment would not damage me financially?
The investment may be suitable for high net worth and sophisticated investors who will already be well aware of all of the above risks, are looking to invest a small part of their assets in corporate lending, have done sufficient due diligence, and feel that the return on offer is sufficient for the risks involved in lending to a small company.
If you are looking for a secure investment, you should not invest in corporate loans with a risk of 100% loss.