Mencap housing arm launches 'largest ever bond issue' by charity

Alastair Graham, director of Golden Lane Housing, says he expects most buyers of the £10m-worth of bonds to be social investors such as charitable foundations

Alastair Graham
Alastair Graham

Golden Lane Housing, the housing arm of the charity Mencap, has today launched a £10m bond issue to raise money to buy homes for people with learning disabilities.

According to Golden Lane, the bond is the largest ever issued by an operational charity and will be used to buy houses which will then be rented to people with disabilities. The interest on the bond will be funded through rent on the properties.

The bond will be have a five-year term, and will pay 4 per cent per annum. The minimum investment will be £2,000 per investor.

Alastair Graham, director of Golden Lane Housing, said he expected most of those buying the bond would be social investors such as charitable foundations.

"We did some soft market testing to test the shape of the final product," he said. "We’ve spoken to social investors. We’re confident that our offer will be well received."

Graham said that if the first tranche of the bond was successful, the charity would look to raise a much larger bond in nine to 12 months’ time", targeted at the commercial market.

The bond will not be listed on an exchange, but Graham said there would be a secondary market which will allow buyers to sell the bond onwards.

He said the bond was better than a bank loan for the charity because it did not require a guarantee, and allowed the charity to raise 100 per cent of the value of the homes it wished to buy.

"We used to have a model where part of our funding came from local authority loans, and the rest from bank lending," he said. "However, the local authority funding has almost dried up, so we’re looking at a new way to do things."

The charity issued a 10-year bond in 2003, through which it raised £1.8m.

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