Symtomax is offering bonds paying a 30% return over 24 months – 12% in the first year and 18% in the second year.
There is an option to exit the bond after 1 year. However this assumes that Symtomax will have sufficient liquid funds to repay investors who wish to exit.
Who are Symtomax?
Symtomax is incorporated in Portugal as Symtomax – Unipessoal Lda (Unipessoal translates as “sole proprietor”) and in the UK as Symtomax SPV.
Minette Coetzee is the sole owner of the UK subsidiary and listed on Symtomax’s website as CEO and Founder.
According to her LinkedIn bio, Coetzee was previously Managing Director of Atlantis Advice Bureau and a Director of The Mareeba Group. Both are obscure Gibraltarian companies about which there is very limited publicly available information.
How safe is the investment?
Adverts for Symtomax’s bonds sent via email and Facebook claim the investment offers “Asset Backed Security” and that “the investment is Brexit proof”.
Secured lending 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 Symtomax, 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 Symtomax) to confirm that in the event of a default, the assets of Symtomax would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Symtomax tells them about their assets.
Symtomax claims in its investment literature that it has a “95 hectare facility, producing 700,000kgs Comparison site with a market capacity of $9.28bn, the current market leader.” [sic]
Claiming to be able to produce $9.28bn worth of cannabis is a big claim for a startup company whose website was nothing but a placeholder as recently as August 2018.
Symtomax’s claim to be “Brexit proof” is extremely dubious as it is a Portugese company offering bonds in Sterling to UK investors.
Should Sterling rise from its current record lows, it will cost the company more to repay its already-very-expensive bonds.
According to a press release, Symtomax has recently hired the former State Secretary for Health and President of Portugal’s health regulator Infarmed, Dr Eurico Castro Alves, as director of Symtomax.
Whether the President of Portugal’s health regulator should be working for a pharmaceutical producer, given the potential conflict of interest issues is a question I will leave to the regulator.
For investors, the thing to remember is that legitimacy by association is not a substitute for due diligence.
The fact that a government official has joined the board does not make an investment paying 12-18% per year any less high risk.
Should I invest in Symtomax?
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 startup 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 up to 18% in a year is extremely high risk. As an individual, illiquid security with a risk of total and permanent loss, Symtomax’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?
- Have I conducted due diligence to ensure the asset-backed security can be relied on?
If you are looking for a “secure” investment, you should not invest in corporate loans with a risk of 100% loss.