Hightown Praetorian and Churches Housing Association expects to raise around £10m after it became the second organisation to make use of a platform to list a bond on the London Stock Exchange.
The housing association which has an annual income of around £45m, builds and manages more than 4,400 properties in Hertfordshire, Bedfordshire and Buckinghamshire.
Earlier this week it issued the bond through the Retail Charity Bonds platform created by Allia, a charity that specialises in developing social investment opportunities, in association with global investment bank Canaccord Genuity.
David Bogle, chief executive of Hightown, said: “We aim to help homeless people and people who cannot afford to rent or buy at market rates by developing new high-quality homes. The launch of this bond will help us to fund this vital work. It is good news for Hightown, for investors and most importantly for those people who will be housed in the new homes.”
The offer period is expected to close at 12 noon on 28 April 2015 and the bonds are expected to be listed on the UK Listing Authority's Official List and admitted to trading on the London Stock Exchange. Canaccord Genuity Ltd is acting as lead manager on the issue.
Bonds will be issued to wholesale and retail investors, with an initial minimum amount of £500. They will pay investors a fixed rate of interest of 4.4 per cent per annum, payable twice yearly in October and April. They are expected to mature on 30 April 2015, with a final legal maturity on 30 April 2027.
Golden Lane Housing, an arm of Mencap, was the first to use the platform last year and due to strong demand, the offer period of the bond closed early and £11m was raised in less than two weeks.
Retail Charity Bonds is a special purpose vehicle that was set up by Allia as charitable community benefit society in June 2014. It passes on income from the bond issue to charities in the form of a loan. Charities are then responsible for meeting all the repayments.
A bond is a debt agreement where the issuer agrees to pay a fixed rate of interest each year for an agreed period. At the end of that period the issuer repays the capital. Charities have increasingly used bonds in recent years to buy property, fund the development of charity shops and buy higher-yielding investment assets.
