About

Nerth Energy

About Downing

At Downing, we aim to make a difference in the lives of our investment community. We design investment products that help investors look after their financial wellbeing, while our investment partnerships support businesses in achieving their ambitions.

In uniting these two objectives, we build lasting relationships that are the foundation of our investment community. We value flexibility, transparency and integrity in everything we do, and in our willingness to learn and be innovative allows us to evolve.

So far, over 25,000 investors have helped us raise more than £1.7 billion that has been invested in businesses that make a difference, including renewable energy, care homes, health clubs and children's nurseries. Along the way we have built a vast wealth of experience and expertise, which help drive our mission to create value and growth for our stakeholders.

We launched Downing Crowd in 2016 to allow investors to lend to individual businesses of their choice, in sectors that they like. We look for companies that can offer some form of asset-backing with decent returns ranging all the way from 2.25-7.5% p.a.

We are proud that after four years and £130 million raised in bonds, all investors have to date been paid back their capital and interest in full, although past performance is not a reliable indicator of future performance. We continue to apply our standards of due diligence and monitoring to individual bonds and our fee (which is paid by the borrower) is contingent on investors getting their capital back.

What kind of bonds do you offer?

These are simply corporate bonds that are not listed on a stock exchange. They aren’t listed, because when companies want to raise smaller amounts of money (usually under £5m) for a shorter time term (typically 1-3 years, though a few of our bonds have been longer), the costs and the time it takes to list makes it prohibitive.

So as an investor, when you choose a Downing bond you are usually locking up your money for a fixed period of time

Crowd Bonds are regulated by the FCA either as Non Readily Realisable Securities (NRRS), or Speculative Illiquid Securities (SIS) depending largely on the business that is issuing the bond.

If that business makes loans or investments, or develops property, then it’s likely to be a SIS - in which case only high net worth individuals or sophisticated investors are allowed to invest. If the business is a normal trading business that does not make loans or investments or develop property, then the bond is likely to be classes as an NRRS - in which case everyone can invest (although everyday investors are capped at 10% of the their net investible assets).

In both cases, the borrowers tend to be relatively mature businesses or to have tangible assets and, as such, typically have lower risk profiles than start-ups. This means they can attract cheaper funding to replace more expensive finance taken earlier in the business lifecycle. Funds raised through our bonds are often used to refinance some of that more expensive funding.

Downing Bonds are often secured against a business’s tangible assets (such as wind farms, hydro plants and care homes) to help manage the risk for investors. Downing acts as security trustee with a debenture over these assets. This means that if the borrower defaults on the bond, Downing has the right to sell the assets to try and pay back some or all of your capital and interest.

All the bonds are transferable, but as there is no established secondary market you should assume that you need to hold your bonds for the full term.

Please note, your capital is at risk and returns are not guaranteed. The Financial Services Compensation Scheme (FSCS) for deposit protection does not apply to Downing Crowd Bonds. It does apply, however, to funds held in the client money account prior to investment in a Downing Crowd Bond. See the Key Risks for more information about the FSCS.

Under the FSCS investment protection scheme there may be circumstances in which investors can claim up to £85,000 of compensation where Downing LLP is unable or unlikely to honour legally enforceable obligations against it (e.g. claims for fraud or misrepresentation). However, investors will not be able to claim under the FSCS simply because a Bond fails to repay capital or pay interest. This is unlikely to significantly affect the risk of investing in the Downing Crowd Bonds.

Due diligence

We place high importance on making sure you have all the information you need to make an informed decision, including giving you a breakdown of the due diligence we’ve undertaken on your behalf in the relevant Offer Document. While we believe that we carry out due diligence to an appropriate level, we use certain assumptions, including that all documents and historical details provided to us by the borrower are accurate and genuine and that no material information has been withheld from us.

Due diligence can include reviewing any contracts, warranties or insurance policies that are in place, checking the borrower has any relevant permissions or licenses required and reviewing third-party valuations of the underlying assets. The larger investment amount involved with our bonds can allow platforms to carry out more due diligence, providing you with more detail on what you’re investing in compared with to some other types of crowdfunding.

Many of the businesses issuing bonds on our platform have previously been investments through the VCT or EIS funds we manage, so we have a good understanding of the business fundamentals and the management team. As a point of principle, we don’t invest in sectors where we have little or no knowledge or experience.

Disclosure

To make it clear where your money is going, a full Offer Document is provided to you for each Crowd Bond. This details:

  • the business that is raising the funds;
  • the value of the underlying assets;
  • the due diligence that has been undertaken;
  • the key risks involved with investing;
  • any conflicts of interest; and
  • fees.

The Innovative Finance ISA (IFISA)

The IFISA wrapper allows you to invest in bonds with all the tax advantages of an ISA. For more information about how the Downing IFISA works, please click here. Please note that ISA eligibility does not guarantee returns or protect you from losses.

Self-Invested Personal Pensions (SIPPs)

SIPPs are a type of personal pension plan that allow you to make your own investment decisions based on a range of opportunities allowed by HMRC.

Downing Bonds are eligible for inclusion provided your SIPP provider allows non-standard assets (which is subject to the discretion of the trustees). If you are interested in investing with a bond in your SIPP, please email crowdfunding@downing.co.uk as soon as possible so that we can liaise with the trustees.