You could lose all of your money invested in these products.
These are high-risk investments and are much riskier than a savings account.
50+ years combined experience
between Ian Allder and Parik Chandra, heads of DWF.
£50m pipeline
Estimated pipeline figure as at 22 December 2021.
£15m of facilities
DWF has agreed with lenders to facilities totalling £15m (subject to certain conditions) as of 22 December 2021.
£6m+ loaned to date
Over £6m of the agreed facilities have currently deployed as of 22 December 2021.
Downing Wholesale Finance (DWF) provides wholesale lending facilities to other financial lenders. Broadly, these solutions tend to be targeted at asset finance and property, the latter comprising of both bridging and development finance.
The DWF team look for established lenders with experienced management teams and a demonstrably performing portfolio.
When lending to a company in the asset finance market, typical assets being financed would be vehicles, machinery and computer equipment.
For block discounting loans, DWF has a number of methods of redress in the event of default or financial difficulty of any of the parties. Its bridging and property loans are secured against underlying assets with current valuations in excess of the value of those loans.
Note that DWF bonds are restricted to High Net Worth Individuals, Sophisticated and Professional investors only.
The Financial Conduct Authority (FCA) has restricted the promotion of some bonds to every day investors from 1 January 2020.
The new rules apply only to what the FCA term 'speculative illiquid securities' (SIS). This basically means unlisted debentures or preference shares issued by a company that then uses the funds raised to lend to or invest in other companies or to purchase or develop property that is not for its own use.
Downing Wholesale Finance bond is a speculative illiquid security and therefore investment is restricted to High Net Worth, Sophisticated and Professional investors only.
You can find out more about the FCA ruling here.
Wholesale lending describes the activity of lending to other finance companies, to allow those finance companies to raise funding against capital tied up in one or more finance agreements with their own customers. Downing Wholesale Finance currently focus on block discounting for asset finance companies and bridging finance companies, and other structured facilities including credit lines structured as senior debt.
Downing enters into a long-term relationship with a finance company under a Master Agreement, having conducted due diligence on the policies, procedures, processes, markets and portfolio management the finance company employs. A third party also conducts an audit in order to give an experienced third-party opinion on the company.
Periodically Downing lends the finance company an amount which is at a discount to the amount the finance company has already lent to their underlying borrowers in a ‘block’ of finance agreements, hence the term ‘Block Discount’. This gives the finance company the funds to continue to lend more and build their book. Typically the amount lent is 90% or less of the value of the underlying lending.
If any of the underlying borrowers fail, the finance company is typically obliged to replace the ‘bad’ paper with equivalent performing loans (known as replacement paper).
If the finance company fails, Downing can step in and collect out on the underlying deals. Downing also maintains rights to the underlying assets should the underlying borrower fail.
DWF has agreed with lenders to facilities totalling £15m (subject to certain conditions), with over £6m currently deployed as at 22 December 2021. All lending is supported by underlying security which if realised will be maintained at a level expected to fully recover DWF’s loan amount.
The structure of block discounting affords a block provider five layers of protection, presented below in order of importance:
1) The Blocker (the finance company)
The credit covenant of the blocker and any guarantor(s) and thus the likelihood of the Blocker meeting its obligations to DWF.
2) Replacement paper (new end user agreements)
The availability and quality of good underlying end-user agreements to replace paper that is no longer performing (i.e. the ‘bad’ paper) in the portfolio.
3) Cover ratio
The ratio of the gross receivables that fall due to the blocker from the end users against the gross receivables due to DWF. i.e. the recovery that DWF would realise were the blocker to fail, assuming all end-user agreements remain good.
4) The underlying borrowers (end users)
The portfolio – the end-user covenants under the blockers credit policy and any guarantor(s) and the performance of the portfolio (delinquency, write-offs) and thus the likelihood of DWF being made whole in the event of a step-in.
5) Underlying assets
The value in the underlying assets in the event of a step in and an end-user default. The sale value of the underlying asset would be for DWF.
The DWF team is led by Ian Allder. Ian has over 32 years of financial experience and has worked previously at financial providers such as Santander and RBS Lombard. He specialises in asset and receivables finance for a wide range of market sectors.
The team is also supported by Parik Chandra. Parik heads the Specialist Lending Team, comprising both Property Finance and Wholesale Lending. On the property finance side he is primarily focused on residential development finance, non-speculative commercial development finance and bridging finance, whilst on the wholesale lending side he is focused on providing structured finance facilities to other lenders. Parik has 20 years' financial services experience, predominantly focused on debt and the real estate finance space where he has led over 150 transactions, but has broader experience including leveraged finance, restructuring and private equity placement.
The effect of Covid-19 on the UK and global economies has been significant. We are still in the middle of the pandemic and there remains uncertainty about the future impacts of past and future measures taken. There remains a risk that these events could impact the ability of the issuer to make interest payments on the Bonds when they fall due, although this is not currently expected or forecast.
Reservations are not binding. Minimum amount is and maximum amount is
We have closed reservations for this investment. However, we can notify you when the bond is open for investment (there will be limited additional capacity).