Alpha Plus Holdings plc, a provider of private education which owns and operates 18 independent schools, nurseries and sixth form colleges mainly in London, launched an eight-year 5 per cent retail bond on Thursday (10 March).
This is the first retail bond issue on the London Stock Exchange's Order book for Retail Bonds (ORB) since August 2015.
It is the second secured issuance by the company. The first has traded at a premium to its issue price on ORB since its launch in 2012.
Minimum subscription amount is £2,000, with further purchases in increments of £100.
The first interest payment of £2.50 per £100 of investment will be made on 30 September 2016. Thereafter, interest will be paid semi-annually.
The offer period is expected to close on 23 March 2016. The authorised distributors are Interactive Investor, Redmayne Bentley LLP and Barclays Stockbrokers.
Retail bonds can offer access to different types of business that are defensive and counter-cyclical. In this case the bonds are secured against a portfolio of Alpha Plus's school buildings and other assets.
But retail bonds carry the risk that if the issuer can't pay the interest due or repay the capital, there is no protection from the UK Financial Services Compensation Scheme (FSCS).
For deposits in a bank the FSCS will pay compensation of up to £75,000 per individual per institution if the institution goes bust.
Therefore, retail bonds should not be viewed as a substitute for savings accounts.