Rugby club grabs chance to join retail bond trend

David Armstrong, chief executive of Wasps, claimed the bond is the first transaction of its kind for the sports industry

Simon Read
Monday 27 April 2015 07:49 BST
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Wasps players run out on to the Ricoh Arena pitch for the first time
Wasps players run out on to the Ricoh Arena pitch for the first time

The rugby club Wasps will today become the latest high-profile organisation to launch a retail bond. The sports business, which owns the Ricoh Arena in Coventry, is hoping to raise between £25m and £35m through 6.5 per cent seven-year bonds, with the investment due to be paid back on 13 May 2022.

The company has set up a new business, to be known as Wasps Finance, to issue the bonds, and they will be “guaranteed” by the operating companies Wasps Holdings and Arena Coventry.

Interest will be paid on 13 November and 13 May in each year.

“This is the first transaction of its kind for the sports industry,” claimed David Armstrong, chief executive of Wasps. “The move to the Ricoh Arena was transformational for Wasps, and our new home provides us with multiple income streams.”

Retail bonds, which allow investors to back companies with as little as £2,000 for much higher than deposit rates, have proved popular with investors, with demand often outstripping supply.

Last week, for instance, a retail charity bond offer for Hightown Praetorian & Churches Housing Association closed 10 days early after raising £27m. Investors were attracted by a fixed rate of interest of 4.4 per cent a year for the next decade.

Others have added novelty to their bonds to attract investors. The Jockey Club’s “Racecourse Bond” offered 7.75 per cent over five years, which included part-payment in loyalty points, which could be used for rewards at the company’s racecourses.

Meanwhile Hotel Chocolat’s bond allowed investors to choose between an annual return of 7.25 per cent of in-store credit or 7.33 per cent cash equivalent in the form of a monthly box of chocolates.

But Adrian Lowcock, head of investing at Axa Wealth, warned that the high returns that the bonds offer come with high risks. “These bonds often look like secure alternatives, but they are actually higher-risk alternatives.”

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