THRIVE CORPORATE MANAGEMENT SERVICE

Transcription

1 THRIVE CORPORATE MANAGEMENT SERVICE

2 CONTENTS WELCOME TO BLACKFINCH 3 BLACKFINCH CORPORATE MANAGEMENT SERVICE 4 HOW IT WORKS 5 TRADING STRATEGY 6 LENDING 7 STARTING YOUR LENDING BUSINESS 9 TYPICAL DEALS 10 KEY BENEFITS 12 INVESTMENT TEAM 14 RISKS 16 INVESTMENT LEVELS AND FEES 18 LET US HELP 19 2

3 WELCOME TO BLACKFINCH Blackfinch has been operating in the tax-efficient investment market for over 25 years providing products with a focus on capital protection, security and growth. Our group has built significant experience and expertise throughout this time and now has approximately 200 million under management and administration through trading companies and client portfolios. Blackfinch focusses on creating portfolios for investors which have asset backing and solid income streams whilst also benefiting from favourable tax reliefs which are supported by the Government. The level of cash held in a business is an important factor of a company s well being. However, getting the balance right is imperative as holding too much can have a negative impact on both you and your business. As a business owner or major shareholder cash is something that your business loves to have. Holding high levels on your balance sheet will often be a reflection of healthy trading. It can provide you with reassurance for protection against tough times as well as enabling you with options for the future. However, if too much capital is held in a deposit account during periods of low interest rates, this, coupled with high inflation could be an expensive luxury. If excess cash in your business is not efficiently managed you and the other shareholders could be missing out on opportunities to maximise profits on potential tax reliefs. We have therefore developed the Blackfinch Corporate Management Service to provide businesses with the opportunity to maximise the earning potential of excess cash, as well as maintaining attractive tax reliefs for shareholders. RICHARD COOK CHIEF EXECUTIVE 3

4 BLACKFINCH CORPORATE MANAGEMENT SERVICE Blackfinch have developed a management solution which is designed to deliver strong risk-adjusted returns for surplus cash, held on deposit, within your business. THE CHALLENGE Many business owners have developed their company over a number of years through a range of challenges and mixed fortunes. As time goes by, these companies can change in dynamic, their underlying trading activity can change direction and the business owners can change their attitude to risk. For many business owners it is common for there to be a surplus of working capital within the company which is not producing any kind of return. Whilst this cash provides a valuable cushion within the business and owners do not want to take undue risk, Blackfinch has identified a solution that can help to provide transparent returns through trading activity which benefits from high levels of underlying security. THE SOLUTION The Blackfinch Corporate Management Service aims to work with business owners in order to utilise surplus cash within the company whilst ensuring that the owners stay in control of their capital. Surplus cash stays within the business and Blackfinch is appointed under a management agreement to provide a service to the directors of the company. Under the management agreement Blackfinch helps the owners to develop a trading strategy, based on asset backed lending and property development lending, which fits within their own risk profile and return expectations. This means that the business owners stay in control of the day to day business, whilst Blackfinch works to ensure that the business plan is achieved and presents the underlying trading opportunities to the Board. 4

5 HOW IT WORKS Well diversified asset-backed loans can now be directly accessed by business owners in a straight-forward structure. When you deploy capital in the Blackfinch Corporate Management Service you will participate alongside other businesses in direct lending activity to small and medium sized UK companies. As a lender you will be allocated a share of the profits made through the service and benefit from the security taken on each loan opportunity. Blackfinch will match your capital to loans that have been selected by us and our affiliate companies. You therefore benefit from sector specialists with a wealth of experience in the asset-backed lending market. Your capital will be deployed into various direct lending activities such as residential property developers. This enables them to take advantage of opportunities and to produce a positive return. All lending is asset-backed and focused on capital protection. We usually therefore only accept security which is taken on a first charge basis over land, buildings and other assets. Blackfinch will select the loans that you will enter into, execute the loans, ensure security is taken on the borrowers assets and attend to the recovery of any debts owing. We will rebalance your loan book for diversification and give you exposure to a wide range of borrowers as new lending opportunities arise. 5

6 TRADING STRATEGY Blackfinch Corporate Management Service allows your company to access asset-backed lending trades which focus on diversification, security and risk mitigation balanced with creating profit. TRADING OPPORTUNITIES Blackfinch has been established in the UK investment market for 25 years. We have been providing investment and trading solutions to corporate and individual clients throughout this time. This has helped us to gain extensive experience and expertise and develop the underlying relationships which enable us to provide this service to your business. We have built strong relationships with a large number of property developers and other asset-backed borrowers, ensuring that we are able to access market-leading lending activities, as part of our management service for your company. LENDING AS A TRADE Our management team will work with the owners of your company to develop a bespoke trading strategy based upon a range of lending criteria which suit your risk and return expectations. We will help you to develop a business plan which defines how you want to see your company run, allowing you to stay in control of the company s trading activity while we provide key expertise and lending opportunities to your business. We enable you to define the lending activity which will underpin your trading activity and then view the loans before your capital is deployed. You are able to choose your trading strategy based on factors such as loan term, types of borrowers, the average return you wish to earn and the level of security you wish to take over underlying assets. This means that you remain in control while we help you to develop a strong and well-diversified lending business. 6

7 LENDING Lending through the Blackfinch Corporate Management Service benefits from underlying asset security with a strong emphasis on preserving capital and creating profit for your business. ASSET-BACKED LOANS Whether the loan is related to bridging, a corporate loan, or a loan made to a property developer, your capital will always be underpinned by a tangible asset over which your company can take security. The underlying assets, which back the loans, are analysed by our specialist investment management team to ensure that the security is strong and that the value of the asset provides suitable security for your company s capital. The underlying asset will normally consist of a building, land and tangible business assets. These assets will be valued by third party experts carrying their own Professional Indemnity Cover and the assets will target sufficient value to provide comfort in the event of market declines. BLACKFINCH LENDING EXPERIENCE (LAST 36 MONTHS)* TOTAL NUMBER OF LOANS 28 TOTAL LOANS REPAID 10 OUTSTANDING LOANS 18 TOTAL LENDING ( ) 41,846,803 TOTAL REPAID ( ) 15,671,505 OUTSTANDING LOANS ( ) 26,175,298 AVERAGE LOAN SIZE 1,454,183 BAD DEBTS 0 *AS AT AUGUST

8 PROPERTY DEVELOPMENT FINANCE Blackfinch has an extensive range of relationships within the real estate sector, with a large number of experienced property developers approaching us on a regular basis to support their exciting new projects. This means that Blackfinch is able to select trading opportunities from the strongest developers, in geographic regions with high demand and with the most secure underlying assets to protect loan capital. Blackfinch conducts extensive due diligence on the lending opportunity as part of the management service which we provide. We scrutinise the underlying property development project, the capabilities and experience of the developer, the value and security related to the underlying asset, as well as the viability of the borrower s exit strategy and their ability to repay your capital. Once money has been loaned to a developer, we monitor the performance of the underlying project to ensure that your capital is protected by the underlying asset s value, throughout the full term of the project. LOAN TO VALUE (NET) AND TYPICAL INTEREST RATES LOAN TO VALUE (NET) 90% INTEREST RATE 18% 80% 16% 70% 60% 14.4% 14% 12% 50% 10% 40% 9.6% 8% 30% 7.2% 6% 20% 4% 10% 2% 0% SENIOR STRETCHED SENIOR MEZZANINE 0% (SECURED BY 1ST CHARGE) (SECURED BY 1ST CHARGE) (SECURED BY 2ND CHARGE) TARGET AVERAGE LOAN RATES MAXIMUM LTV 8

9 STARTING YOUR LENDING BUSINESS THE ADVICE AND SIGN UP PROCESS Initial discussion with your adviser Need and suitability identified Application form completed Application pack returned to Blackfinch Funds transferred to trust account THE BLACKFINCH ESTABLISHMENT PROCESS Blackfinch verify application pack Business plan created from fact find Welcome pack sent to client Business plan approved by client THE TRADING PROCESS Suitable loans identified by Blackfinch Loan overview documents sent to client Client approves loans Blackfinch execute loan documentation Funds advanced to borrower Loans monitored by Blackfinch Quarterly trading updates sent to client Business plan reviewed semiannually 9

10 TYPICAL DEALS WOOLACOMBE DEVELOPMENT WOOLACOMBE FINANCE ARRANGED C. 2M ASSET-BACKED LOAN FINANCE PERIOD 20 MONTHS SECURITY SECURED WITH CONTRACTUAL FIRST CHARGE PROPERTY OPTION LOAN TO VALUE 34% An asset-backed loan of c. 2m was provided to a developer of a former hotel in Woolacombe. The site was in a prime location with stunning beach views and is being refurbished into 55 residential units, a restaurant and a swimming pool which will also feature a 24-hour concierge service. 10

11 ST DOMINIC S DEVELOPMENT STOKE-ON-TRENT FINANCE ARRANGED C. 2.83M DEVELOPMENT LOAN FINANCE PERIOD UP TO 26 MONTHS SECURITY FIRST CHARGE LOAN TO VALUE 53% A property development loan of c. 2.83m was provided to the developers of a residential development of 23 residential housing units in Stoke-on-Trent. The housing units will comprise a mix of 3 and 4 bed family homes with prices ranging from 185k to 270k. The location of the adjacent nature reserve that wraps around the north and west end of the land provides a great opportunity for new residents in terms of amenity and backdrop. The loan has been structured with strong levels of security for investors: 53% LTV on a first charge basis, backing an established property developer with a proven track record in the area. 11

12 KEY BENEFITS We have designed the Blackfinch Corporate Management Service to deliver a number of key benefits. ENHANCED RETURNS FROM SURPLUS CASH The Blackfinch Corporate Management Service offers businesses the opportunity to deploy surplus cash into direct lending activities and target a competitive return of between 4% 7% per year (net of all fees) but with no upper limit. During periods of low interest rates and high inflation this can help your business earn more with surplus cash and exceed the level of returns available with deposit based accounts. EASE OF ACCESS Should you wish to exit loans, Blackfinch will access its network of other lenders and attempt to sell your loans on your behalf. There is no guarantee regarding how quickly this could take place although historically we have been able to facilitate this liquidity within 2 4 weeks. ESTABLISHMENT Once we receive your application pack we will devise your business plan and consult with you to ensure that this fits with your expectations. This plan will be revisited from time to time in order to ensure that we are working with you to deliver the trading business that you want. The establishment process will typically take 2 4 weeks before your business accesses its first loans. SECURITY Underlying assets will provide strong security to underpin the company s capital. The assets will be transparently valued and security will be via a legal charge. Blackfinch will continue to monitor the value of the assets in comparison to your loan position, ensuring that your business always benefits from more than 100% security. BESPOKE SERVICE We understand that company structure and priorities differ greatly in the marketplace. Therefore, we work extensively with you to tailor a solution that fits your specific company needs and develops your bespoke business plan. FLEXIBILITY We understand that your business changes and grows. If and when you have additional surplus cash we can accept incremental amounts subject to a minimum amount of 10,000. In addition we will renew your bespoke business plan every 6 months to confirm it is still relevant. 12

13 IHT REDUCING INHERITANCE TAX WITH BUSINESS RELIEF CGT REDUCING CAPITAL GAINS TAX WITH ENTREPRENEURS RELIEF If a company is holding cash in excess of business needs it can lead to HMRC restricting the amount of Business Relief (BR) available to shareholders upon their death (the rate is referring to 50% or 100% rate of relief). If you sell your shares or liquidate your company, you will generally need to pay Capital Gains Tax (CGT) on the net sales proceeds. By utilising Entrepreneurs Relief (ER), the amount of tax payable can reduce to 10%. This can result in a costly 40% IHT charge that reduces the amount of the estate available to pass to your intended beneficiaries. Through the Blackfinch Corporate Management Service the surplus cash in your business is put to use into lending activities that should meet the qualifying criteria for BR. This should enable shareholders to mitigate IHT upon death. Your company must meet certain requirements in order to qualify for relief, so it is important to ensure your shareholding and the company as a whole satisfy the legal requirements to be eligible for BR and continue to meet the legislative requirements on an ongoing basis. Blackfinch can provide assistance with this; however, if you are in any doubt, you should take independent advice. If your company is holding surplus cash or other non-trading assets when shares are sold or the company ceases to trade, this can lead to HMRC restricting the availability of ER and result in an increased capital gains tax charge. The Blackfinch Corporate Management Service deploys surplus cash in your company into qualifying trades to increase the availability of ER for qualifying shareholders. This allows qualifying shareholders to potentially reduce the CGT on the sale of the shares or the liquidation of the company. 13

14 INVESTMENT TEAM Our investment team consists of senior management at Blackfinch who are responsible for the review and approval of all underlying investment opportunities that are considered for our Corporate Management Service. RICHARD COOK CHIEF EXECUTIVE Richard has been Chief Executive Officer since 2009 and has been involved in the structuring and management of tax-efficient investment assets for over 14 years. Richard conceptualised and launched the Blackfinch brand and has overseen the growth and expansion of the company within the UK retail market, evolving the company to where it is today. Previously, Richard has worked in senior banking roles within Merrill Lynch and the Bank of New York. RICHARD SIMMONDS CHIEF INVESTMENT OFFICER Richard has 15 years senior experience in financial services, specialising in asset backed fund management. Richard has extensive project, corporate finance and fund management experience across multiple asset classes such as property, renewable energy, asset backed lending and capital protected investments. Richard holds an Executive MBA from IE Business School the Certificate in Discretionary Investment Management and the Diploma in Financial Planning. Prior to joining Blackfinch Richard held roles at NatWest, FTSE and Credit Suisse in London and New York. DAVID HIGSON INVESTMENT MANAGER David joined Blackfinch in April 2017 as an Investment Manager. His previous role was as Manager in the Transaction Services team at PwC London where his focus was performing financial due diligence on deals across a range of sectors. David holds a degree in Economics from the University of York, is an ICAEW qualified chartered accountant and is studying for the Investment Management Certificate. 14

15 HENRY CLARKE LEGAL COUNSEL Henry is a solicitor advocate who holds a Distinction in his LLM from the University of London. He trained professionally with top international law firm Clifford Chance before working for international law firms Clyde & Co and Dentons including in the Middle East. Henry s private practice career has spanned the areas of finance, commercial law, construction projects and construction disputes which gives him a wealth of experience to draw upon when reviewing construction projects and investment opportunities. STEFAN AGOPSOWICZ INVESTMENT MANAGER Stefan has been with Blackfinch since 2009 and is involved in the analysis and valuation of potential new investment opportunities for the company s portfolios. He holds a current Statement of Professional Standing issued by CFA Society United Kingdom, having passed Level 1 of the CFA exam and achieved the CFA Level 4 Investment Management Certificate, and is a member of the CFA Institute. ANDREW TROUGHTON RICS, CAAV INVESTMENT SPECIALIST Andrew is a Chartered Surveyor with over 16 years experience in the residential and agricultural markets, working predominantly on valuations, tenancy work, compensation claims, planning and development. Andrew is also owner and manager of Carver Knowles, a successful and established Chartered Surveying business. PAUL CHIVERS B.ENG (HONS) INVESTMENT SPECIALIST Paul has over 25 years experience in the energy and commodity sector, working in senior-executive positions in various international banks and trading houses, including Mercuria Energy Trading S.A., BNP Paribas, Deutsche Bank and Credit Agricole Indosuez. Paul worked on the wave of government utility privatisations from the late eighties in the electricity and gas sectors, as well as working on upstream oil and gas financing and renewable energy. Paul holds a B.Eng (hons) in Electrical and Electronic engineering from the University of Liverpool. 15

16 RISKS This investment may not be suitable for all investors and we recommend that you seek independent tax and financial advice before making a decision. You should carefully consider the following risk factors together with all other information contained in this brochure. IN PARTICULAR, YOU SHOULD CONSIDER THE FOLLOWING: VALUES AND RETURNS No representation is or can be made as to the future performance of the Blackfinch Corporate Management Service or that it will receive the level of returns contained in this brochure. The assumptions are assumptions only and these may not be realised. Blackfinch Corporate Management Service invest in small, unquoted companies. Your capital is at risk and the investment return is not guaranteed. The value of your investment and the returns you receive are dependent on the value of the assets in the company or companies that the Blackfinch Corporate Management Service invests and any income they earn. TAXATION Any changes to the taxation environment or HMRC practice may affect investment returns. Accordingly, you will have your own tax position to consider and must take your own independent professional advice in this matter. You may be liable to make tax payments on any amounts you withdraw from the investment. FUTURE PERFORMANCE Past performance does not imply that future trends will follow the same or a similar pattern. Forecasts made in this brochure may not be achieved. There is a risk that you will not get back the full amount invested. LIQUIDITY Blackfinch Corporate Management Service is a long term investment. Loans accessed by the Blackfinch Corporate Management Service are in unquoted companies and therefore are not readily realisable unlike companies listed on the London Stock Exchange. Any disposal of capital will reduce the value of your portfolio, erode future returns and such disposals will cease to qualify for BR. 16

17 BUSINESS RELIEF (BR) We will invest in companies which we reasonably believe qualify for BR, but we cannot give any commitment that such investments will remain a qualifying investment at all times in the future. The relief is assessed by HMRC on a case-by-case basis at the time of death of the investor, as part of the probate process and therefore cannot be guaranteed. The proportion of the investment that is deemed to qualify at that time assuming it has been held for at least 2 years and is still held at the time of death can be passed to beneficiaries free of IHT. The 2-year time frame begins when HMRC deems the investment has become BR qualifying which may be later than the investment date. REGULATION Although Blackfinch Investments Limited is authorised and regulated by the Financial Conduct Authority, the Blackfinch Corporate Management Service is unregulated and you will not benefit from the regulatory protections afforded to investors under the UK s financial services regulatory regime. CONFLICTS OF INTEREST Blackfinch Corporate Management Service investee companies may acquire shares in, or assets from, other companies managed by Blackfinch Investments Limited. They may also make loans to other entities which are managed by Blackfinch Investments Limited or in which Blackfinch Investments Limited has a financial interest. All loans and transactions will be monitored and will be ratified by the non executive directors of the Blackfinch Corporate Management Service investee companies. THE INFORMATION SET OUT ABOVE IS NOT AN EXHAUSTIVE SUMMARY OF THE RISKS AFFECTING THE BLACKFINCH CORPORATE MANAGEMENT SERVICE. 17

18 INVESTMENT LEVELS AND FEES INVESTMENT LEVELS The minimum amount to participate in the Blackfinch Corporate Management Service is 200,000 and you can make additional contributions of 10,000 or more at any time. TARGET RETURN We will always look to mitigate risks where possible and have access to some of the most attractive asset-backed loans available delivering strong upside potential to your business. Due to the strength of the underlying lending activities and by structuring competitive fees we are able to target a return on your holding of between 4% 7% per annum. LIQUIDITY You have the option to withdraw some or all of the capital, if required. This is facilitated by selling your holding in the loans which will usually take one month. The minimum amount for partial withdrawals is 3,000. ADVISER FEES At your request, we can facilitate any upfront or ongoing fees that you have agreed with your adviser. Upfront adviser fees are deducted from the amount invested, whereas ongoing adviser fees are deducted from your portfolio every 3 months. Ongoing fees will reduce your net return. REPORTING We will issue you with an annual report providing details on the loans you are accessing and a valuation of your holding. INITIAL FEES We deduct an initial fee of 3% from the amount invested (after deduction of adviser fees), to cover the costs of establishing your Corporate Management Service. ANNUAL MANAGEMENT CHARGE We charge an annual management fee of 0.5% plus VAT. We only take this fee after your agreed target return has been achieved. COMPANY SERVICING FEE This fee covers the day to day running costs and fees associated with each of the underlying companies that make up your portfolio including dealing with all taxation, accountancy, legal and any other professional fees that any normal business is likely to incur. Blackfinch Investments provide these services to the companies for a fixed annual fee of 2% plus VAT (charged monthly). ELIGIBILITY The Blackfinch Corporate Management Service is only available to companies that have carried on a business (other than FCA-regulated business) prior to subscribing for it. The company must only lend money through the Blackfinch Corporate Management Service that it has generated through its existing business. 18

19 LET US HELP At Blackfinch our goal is to deliver a service to advisers and their clients which is second to none. We offer a range of support and our team is always on hand to assist you. Product training Presentations Technical support Case studies Illustrations PLEASE CONTACT US FOR MORE INFORMATION T E ENQUIRIES@BLACKFINCH.COM 19

20 20 BLACKFINCH INVESTMENTS LIMITED MONTPELLIER COURT, GLOUCESTER BUSINESS PARK, GLOUCESTER, GL3 4AH