Momentum building for the low-risk BES: Business Expansion Schemes are attracting a new breed of investor

THE TWO Business Expansion Schemes which gave investors a guaranteed return after just six months rather than the usual five-year wait for a BES to mature are likely to be followed by similar ventures.

The Bessa Blue Chip BES, set up to buy properties repossessed by Barclays Bank's centralised mortgage arm, raised pounds 15m and was over-subscribed by pounds 10m. A second version may be in the offing.

But Charles Fry of Johnson Fry, sponsor of the TSB-backed venture which raised pounds 50m in eight days, predicts that new schemes will be put together regardless of tax considerations, such as the carry-back deadline on 6 October or the year end in April. 'It's not time sensitive. At last the public have realised how good these things are.'

Mr Fry is talking to some banks about possible schemes. He is also in discussion with indemnity insurers, who have to pay out when repossessed properties are sold at a loss. But some of these insurers are reluctant to crystallise their losses in large lumps.

Anthony Yadgaroff of the Allenbridge Group said: 'These schemes have whetted the appetite and it's bringing in a lot of people who've never invested in BES schemes.'

The House the Homeless of London (Greenwich) scheme raised pounds 5m in 12 working days and is having to return cheques to disappointed subscribers.

Meanwhile, a number of other BES schemes are still open for those keen to beat the deadline for carrying back tax relief on up to half the investment to the 1991/2 tax year.

The Tobermory Malt Scotch Whisky BES - The Spirit of 1992 PLC - will appeal to some investors through its option of repayment in kind.

Distillation will begin within two weeks of the pounds 250,000 minimum subscription being raised. Tobermory Distillers, on the Isle of Mull, has agreed to produce the spirit for the BES company at pounds 1 per litre, giving a total cost of pounds 1.70 per litre.

The spirit will be sold either as malt whisky or exchanged with products from other Scotch distillers to produce a blended whisky. People will be investing in the making of the spirit rather than whisky that has already been produced.

But the scheme holds little appeal for the BES experts, who are now looking for low-risk deals. The Allenbridge Group will not even analyse it because it does not offer either a contracted exit or an assured property tenancy.

The Harleyscreen scheme - an investment based on the three-hour testing laboratory for HIV - is similarly dismissed because it cannot promise a minimum return.

The contracted-exit BES issues are regarded as the most attractive in the market. The Accumulus BES is backed by the Standard Chartered Bank, which guarantees a repayment after five years of pounds 1.25 for each pounds 1 gross investment.

For a higher-rate taxpayer, this equates to an annual return of 14.6 per cent, according to the Allenbridge Group.

The Cavendish Wates BES offers a similar return and is backed by Midland Bank. The Airways II Assured Growth BES is also categorised as a contracted-exit scheme. However, the guarantor is not a bank but the Airways Housing Society. The Allenbridge Group comments: 'Investors may conclude there is better security in the market for the same return.'

Among the traditional assured tenancy schemes, Unchained Growth II promises a repayment in five years' time of pounds 1.40 for every pounds 1 invested now in property using two guarantors: Laing Homes and managing agent Graham Harvey. Despite its promises, Unchained Growth does not classify itself as a contracted-exit scheme as the promised pounds 1.40 return relates only to amounts which are ultimately invested in property. The prospectus does not say, however, how much will go on expenses. The extent of the final return is therefore uncertain.

Analysts believe that the BES schemes will go out with a flourish. They lose their privileged tax status in December 1993. Until then, taxpayers get full relief up to pounds 40,000 on all investments into qualifying schemes.

----------------------------------------------------------------- ----------------------------------------------------------------- ASSURED TENANCY Name Sponsor Closing date Besres IX Phoenix Sun Life 2 Oct 1992 Capital Prime Properties Johnson Fry 16 Oct 1992 Kerrington Maxi Growth None 25 Sep 1992 Paragon Neill Clerk Indefinite Pathfinder II Johnson Fry 12 Oct 1992 Profit Builder None 5 Oct 1992 Reversionary Gains IV Neill Clerk 20 Oct 1992 Reversionary Recovery Terrace Hill Trust 5 Oct 1992 Serah III Neill Clerk/Terrace Hill 5 Oct 1992 Short Leasehold Terrace Hill Capital Indefinite Sovereign Reversion Johnson Fry 10 Oct 1992 Unchained Growth Neill Clerk 20 Oct 1992 CONTRACTED EXIT Name Sponsor Exit via Return Accumulus Terrace Hill Cap Metfield/StanChart 14.6 Airways II MMI Airways Housing 15.2 Cavendish Wates Smith Williamson Wates/Midland 14.6 ----------------------------------------------------------------- Source: Allenbridge Group 071 409-1111 -----------------------------------------------------------------

PROMOTED VIDEO
News
REX/Eye Candy
science
News
A photo of Charles Belk being detained by police on Friday 22 August
news
News
i100
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
News
i100
News
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?