Category: cauta

Cauta Capital files accounts; £7 million of creditors, £70 million of investments parachuted in?

~ Phoenix ~ 1 Comment

Cauta Capital issues unregulated bonds paying 7-11% interest with a 10 year term.

The company has recently filed its accounts for the year ending April 2018. Due to Cauta’s small size, they were unaudited and did not include a profit and loss account.

The accounts show net assets of £70 million, consisting predominantly of £70 million of investments under “Fixed assets” (described later as “a portfolio of listed shares”), a further £7 million of current assets, minus £7 million of creditors (i.e. bondholders). Which seems like a pretty healthy financial position.

The accounts however immediately raise the question; where did this £70 million in investments come from?

This item in the accounts can be traced back to Cauta’s first accounts for April 2016. In this period, the company raised £1.7 million from investors, and according to the director’s report, “The company has invested £1,472,388 and acquired a further £40,032,988 in listed investments”. How exactly it acquired this £40-million-odd in listed shares is not elaborated on; clearly it had little to do with the £1.4 million net invested by bondholders.

In April 2017 this £40 million share portfolio increased to £65 million in value, and then in the latest accounts it increased again to £70 million.

After the April 2016 accounts, the company significantly cut down the level of information provided in its annual accounts; the 2017 and 2018 accounts did not include a director’s report or profit and loss account.

The 2016 accounts disclosed that of £1.7 million raised from investors, £435,000 was paid out as commission (i.e. around a quarter). Subsequent accounts have not disclosed how commission was paid for further fundraising.

The £70 million listed share portfolio is clearly of paramount importance to Cauta Capital’s financial health. In fact it rather raises the question: if Cauta Capital was able to get c. £40 million of capital injected into it from outside in its first year of trading, why bother raising £1.7 million from the investing public at all?

Cauta Capital is currently being promoted in the French market. According to analytics from similarweb.com, Cauta receives 85% of its search traffic from a total of 24 paid keyword searches, of which the top 5 are French terms which translate as “property investment”, “invest without money”, “stockmarket trading opportunity”, “investment in graphene” and “investment in forestry”.

Cauta Capital

~ Phoenix ~ 1 Comment

Cauta Capital offers unregulated corporate bonds paying 7% per annum on investments of £20k – £35k, 8% per annum on £35,000 – £75,000, or 9% per annum on £75,000 and above.

The website says that funds may be withdrawn after a minimum of 3 years or a maximum of 10 years. There is no indication that the interest rate is higher for investing for longer than 3 years.

Status

Open to new investment.

Who are Cauta Capital?

There is no information on the website on who the directors or owners of the company are.

Companies House shows that there is one director, William Abundes, who is also the sole shareholder.

The company states that it has “a successful track record since 2009”. Companies House records show that Cauta Capital Limited was only incorporated on 10 April 2015 and WHOIS shows that its website was registered on 24 February 2015. This discrepancy is not explained on the website.

Is Cauta Capital safe?

This is an unregulated corporate bond and if Cauta Capital defaults you risk losing 100% of your money.

The Cauta Capital website confirms that the bond is not covered by the Financial Services Compensation Scheme.

The Cauta Capital website says that the bond is ”asset backed” although it does not specify what assets it is secured on. However, if Cauta Capital defaults on its investment, and the assets the bond is secured on cannot be sold to meet all investors’ claims, investors still risk losing up to 100% of their money.

A company called “Jade State Wealth” is listed as the Security Trustee. Jade State Wealth has net assets of £112,413 according to its 2016 accounts.

Should I invest with Cauta Capital?

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.

This particular bond is advertised as asset-backed. Before putting any reliance 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 cover all investors’ money c) the charge over the security has been properly and legally recorded.

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 sufficient due diligence to ensure the asset-backed security can be relied on?

If you are looking for a “secure” or “guaranteed” investment, you should not invest in unregulated products with a risk of 100% capital loss.