Having hit their fundraising target earlier this year, in their first mini bond issue, Shenton has reopened its mini-bond to UK retail investors, accepting subscriptions until the 31st of October. The offering is a fixed income, asset-secured mini bond with the funds being used in international real estate developments. The Shenton Group is based in Singapore and has long, established relationships with property developers in Germany, Brazil and the USA.
With rates of 10% over a 4-year term we wanted to dig deeper into the proposition. We recently caught up with Shenton’s Managing Director, Andrew Thompson, to better understand the opportunity Shenton is offering UK investors.
In summary the Shenton asset-backed bond offers the following key terms to investors:
‘We provide short term high security investment products. Security is our number one priority’
Unlike peer-to-peer lending, where you are exposed directly to a project or borrower, when investing in the Shenton mini-bond you are investing in the Shenton Group and exposed directly to Shenton. The Shenton Group use the funds raised to invest in real estate developments. As an investor it is important to know that the Shenton Group is capable of repaying your investment and that the projects invested in are commercially viable. Andrew Thompson and his team prioritise investor security as discussed during our interview.
‘When we structure investments we consider how to ensure that our investors have the greatest degree of protection. Typically, our strategy is to split the raised funds between different projects and countries. Ultimately, investors are exposed to Shenton, not the projects. They are investing in Shenton and our ability to select projects which display the right balance of commercial opportunities and security.’
Shenton Key Stats
- Founded in 2011
- £390 million raised for international developments
- 10,000+ investors
- 0 defaults to date
Investor Security
Despite Shenton raising a total of £390 million with no defaults to date on any of their 51 projects, they do have solid procedures in place to recover capital, if required.
Security is clearly very important to the Shenton Group. The Shenton bond is an asset-backed investment with all
funds raised matched against the assets of the developer. To add further security, Shenton now takes out insurance on most developments so the Group can recover the money quickly, averting the need to liquidate assets.
‘The insurance protects Shenton. If Shenton were to send £10 million to Brazil we would typically take out insurance on this capital to ensure that we can call on the insurance company to reclaim the capital if required.
To protect this risk of default, we have a recovery strategy. The insurance company may take asset security from the developer and in this case the insurance company will pay Shenton first if a default occurs, then the insurance company recovers the assets.
Security for us is the number one thing. We focus on this above all else.’
Can Shenton repay my investment?
‘In a word, yes. We have a 100% track record of paying our investor on time or early. Our reputation is paramount to us. We have over 10,000 clients and if we make a bad recommendation or investment, we will lose their trust. We have structured this bond to offer maximum security to investors and our tried and tested business model ensures we only participate in projects with clearly defined exit strategies.’
Shenton has put in place a number of steps to protect investors if Shenton was to become insolvent.
‘If Shenton as a group were to go insolvent, NCM Fund Services Ltd holds a debenture and charge over the bond company. They would liquidate the assets in the company and return the money to the bond holders.’
Investors can review the Shenton Group’s financial position in the invitation document, accessed through the Shenton website.
Shenton Website
Real Estate Projects
Shenton has built long-standing relationships with a small number of trusted property developer partners in Germany, USA and Brazil. The typical amount raised for each project is between £10–20 million and the projects chosen are in areas where the value of real estate is experiencing high growth. Andrew commented that it is not uncommon for the value of the developments to appreciate by over 30% in a given year.
‘At Shenton, we divide the money between countries and projects. Today, we’ve invested in 51 projects with investors exiting from 37 of these and with the remaining 14 progressing well.’
The Shenton Bond Invitation Document shows typical projects that the raised funds will be invested into as follows:
La Bijourterie- Durrmenz, Germany
The refurbishment of a jewellery factory into luxury apartments, located in the historic part of Durrmenz.
Figure 1: Refurbishment of a Jewellery factory, Durrmenz
Airtropolis Village — Natal Brazil
A large housing project that will see 965 plots built and sold across 75 hectares. The project is divided into five phases, the first of which is completed and sold. The funds raised in the bond will be invested in the remaining four phases.
Figure 2: Large housing project in Natal Brazil
Highland Meadows — Des Moines, Iowa
An exclusive residential development in Urbandale, the western suburb of Des Moines, Iowa. The first phase of the development has been sold with the funds being invested directly into the second development phase. The total capital requirement of this second phase is $7 million.
Figure 3: Exclusive residential development , Iowa, USA
Investor Due Diligence
With such a global operation we asked Andrew how they conduct due diligence on projects, while being based in Singapore.
‘Firstly, we have worked with our developers for a long time and follow a strict due diligence process. This includes employing a local law firm who checks land ownership, planning and land title. We then obtain project valuation reports and discuss with local estate agents the demand for the project from local buyers. Only once we are convinced that there is a suitable exit strategy in place, sufficient profitability in the project and maximum investment security for our investors, will we launch the project.
We have a global structure in place and can conduct this level of due diligence. We believe it is this which makes the difference between Shenton and its competitors.’
About the Shenton Group
Based in Singapore and founded in 2011, the Shenton Group has become a trusted alternative investment provider to over 10,000 investors.
‘The original founders of the company had already been working in the alternative investment market, specialising in long-term alternative investments. They felt there was a gap in the market for short-term, secured investments, from 1- 4 years’
Figure 4: Founder and CEO, Helen Chong
The Shenton Bond is the group’s first offering in the UK, but Shenton has used the UK as a hub for many years.
‘ We made the decision to launch a UK based bond product because we believe there is a gap in the market for reliable, experienced companies with proven business models to offer a decent, secure rate of return. This is our first step towards European expansion and the development of a wider product portfolio.’
Conclusion
The Shenton Bond is a unique offering in the UK, providing an opportunity for investors to invest in international property developments with returns of 10% per annum. With ambitions to move into a fully regulated environment, investors will be provided with added comfort that the Shenton Group is here to stay.
For more information, visit Shenton Bond and download the invitation document.
