The first Retail Charity Bond to be issued for the care sector has closed after less than a week, having raised £33 million.
The bond, for Greensleeves Care, pays an interest rate of 4.25% a year for a term of nine years, and saw strong demand from a range of institutional, ethical and individual investors.
The bond will be issued through Allia’s Retail Charity Bond platform. According to Allia, it is the largest Retail Charity Bond and the lowest interest rate to date. It brings the total raised through the platform to £91million, following previous issues for Golden Lane Housing (£11m), Hightown Housing Association (£27m) and Charities Aid Foundation (£20m).
Greensleeves Care is the first charitable care home provider to raise finance through this type of listed bond issue, which can be sold to individuals as well as institutional investors. Unlike some forms of funding, the bond finance is not secured against assets and no capital repayments are required until the end of the bond term.
The finance from the bond will enable Greensleeves Care, which provides care and accommodation for the elderly, to increase the number of residents it supports through buying and developing new homes, as well as helping to pay off all existing debt.
With a total of £50 million of bonds created, Greensleeves Care also has the option of raising up to a further £17 million by selling more of the bonds in the future.
The lead manager for the bond issue was Peel Hunt LLP as part of its debt capital markets collaboration with JC Rathbone Associates.
Tim Jones, chief executive of Allia, said:
“The success of this latest Retail Charity Bond reinforces the strength of demand for impact investment opportunities through mainstream financial products. Allia is very pleased to help Greensleeves Care increase the number of older people it cares for and to have proven the viability of this funding route for other charities in the care sector.”
Paul Newman, chief executive of Greensleeves Care, added:
“We are delighted that we have been part of the largest ever Retail Charity Bond issue. The money will be put to immediate use to buy and develop new homes and sites as we invest in our portfolio and our ability to increase the number of older people who benefit from our care.”
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