Retail Charity Bonds - London Stock Exchange of ORB Page 8 London Stock Exchange • In February 2010, the London Stock Exchange launched its new electronic bond market for retail

Retail Charity Bonds is an initiative of Allia, established in association with Canaccord Genuity


Tim Jones, Allia

www.retailcharitybonds.co.uk

1999

CHARITABLE OBJECTS

The provision of loans, guarantees and other

financial instruments on beneficial terms to charities or for charitable purposes by receiving donations and obtaining loans from, and issuing bonds on beneficial terms to the public and others in order to provide such loans and guarantees;

Welcome


Conversations

Gillian Walmsley

Phil Caroe

Henrietta Podd

Alastair Graham

You

Raising capital on the

Order book for Retail Bonds

Driven by investor demand

London Stock Exchange Page 2

• Increasing private investor focus on fixed income

• Bond funds saw record inflows in 2009 and 2010

• Strong demand from UK private client brokers for easier access to bonds

• Private investors keen to take more active role in managing their portfolio and reduce transaction costs

Meeting corporates’ funding needs


• Challenging funding environment, with regulation driving banks to limit provision of credit or to concentrate lending to largest companies only

• UK companies seeking to diversify their funding strategies, to reduce risks and decrease overall costs

• Innovative financing tools are key to create an efficient capital structure

Source: European Central Bank

Launch of ORB


• In February 2010, the London Stock Exchange

launched its new electronic bond market for

retail investors – the Order book for Retail

Bonds (ORB)

• Key aims of ORB are to develop both an

efficient, transparent secondary market in

bonds for UK private investors and to establish

a primary market for distribution of dedicated

retail bonds – opening up new sources of capital for

companies seeking to diversify their funding

A new funding tool for corporates


• ORB has now established itself as an alternative

source of funds for a wide range of corporates

looking to raise debt capital through capital

markets

• A guide for issuers interested in issuing bonds on

ORB is available on London Stock Exchange’s

website: londonstockexchange.com/ORBguide

ORB is suitable for businesses of all sizes and across all

sectors, helping them tap into a new pool of capital outside

of the traditional wholesale markets. We have seen a wide

range of companies issue bonds on the platform, from large

household names such as National Grid through to midcap

companies such as Workspace Group, a provider of office

space for small and medium-sized companies

Xavier Rolet, CEO of London Stock Exchange Group

http://www.londonstockexchange.com/ORBguide




ORB dedicated issues


• 50 ORB-dedicated new issues and 6 taps of existing ORB issues have raised more than £4.5 billion since launch

• 32 different issuers have successfully tapped the retail bond investor community, including:

National Grid, Premier Oil, Ladbrokes, Tesco Bank, Tullett Prebon, Unite Group, Provident Financial…

• Widening investor base - increasingly strong

demand for retail bonds from retail brokers, wealth managers and private investors

Why issue on ORB Diversification and flexibility


Alternative source of funding - issuing retail bonds onto ORB, issuers are

able to tap into a new source of funding and diversify into a new pool of retail

liquidity. A retail bond can either be an alternative source of funding or

complement existing channels

Flexibility - ORB offers greater flexibility for issuers as the size of a retail bond

can be tailored to meet issuers’ particular needs; issue sizes on the ORB have

ranged from £20 million to £300million.

Sensible covenant structure works well for issuers and investors

Structure - Retail bonds have been characterised by simple structures,

however we have seen fixed, floating and index linked bonds issued onto the

market

Why issue on ORB Transparency and liquidity


Transparency – the high level of transparency offered by the Order book for

Retail Bonds is a key benefit for investors and issuers: • thanks to the commitment of ORB dedicated market makers, investors can see

continuous tradable prices on-screen and issuers are able to infer the exact

current yield on their bonds at any time

• bond documentation for all the securities on ORB is available on the London

Stock Exchange’s website

Regulatory supervision – ORB is a EU regulated market monitored and

supervised by the London Stock Exchange’s Market Supervision Team

throughout the trading day

Strong secondary market liquidity – this also drives demand in the primary

market, giving investors confidence that they will be able to trade out easily if

they need

Market Open Ceremony

• Listing a bond on one of London Stock Exchange’s markets is one of the most

exciting days in a company’s development and growth. To mark the occasion,

London Stock Exchange invites new admissions to ‘Open the Market’ and take

part in the prestigious Market Open Ceremony.

• Hosted by a Senior Executive from London Stock Exchange Group, the

ceremony offers companies joining London Stock Exchange's markets the

opportunity to mark their success on the day of their admission.

• The Market Open Ceremony offers its participants a high profile platform to

launch a media campaign or raise the company’s profile.

• Members of the press can be invited to attend the ceremony and conduct

interviews with guests. A live TV feed can be arranged and our high

specification studio facilities can be made available for media interviews.

• A photographer is also present and the company can maximize its exposure

through the Exchange’s press team from organisations such as the BBC, The

Wall Street Journal, the Financial Times, CNBC & Sky News.

Page 9

Why issue on ORB Public Profile

London Stock Exchange

Golden Lane Housing Market Open

Hightown Praetorian Market Open

Page 10

Case Study: Retail Charity Bonds

Market partners


• ORB is currently supported by ten market makers:

– Investec Bank, Lloyds TSB Bank and Winterflood Securities in gilts

and corporates

– Canaccord Genuity, Peel Hunt and Shore Capital across corporate

bond range

– Jefferies International in gilts

– HSBC, BNP Paribas and Numis Securities in a range of corporates

• We continue to work with market partners supporting them with PR

and marketing activity to further develop ORB

• Dedicated partner logos may be displayed by participants

• Listing Fee Waiver for debt securities issued by Charities

ISIN Issuer Name Date

Listed

Maturity

(year)

Coupon

Value

Coupon

Type

Minimum

Denomination Issue Size

XS1221940510 Wasps Finance plc 14/05/2015 7 6.50 F 100 £35 million

XS1200788369 Retail Charity Bonds plc (Hightown) 01/05/2015 10 4.40 F 100 £27 million

XS1205758219 Provident Financial plc 14/04/2015 8.5 5.125 F 100 £60 million

XS1200576699 Intermediate Capital Group plc 24/03/2015 8 5.00 F 1000 £160 million

XS1112834608 Eros International Plc 16/10/2014 7 6.5 F 100 £50 million

XS1103286305 A2D Funding II Plc 01/10/2014 12 4.5 F 100 £150 million

XS1088905093 Burford Capital plc 20/08/2014 8 6.5 F 100 £90 million

XS1066485902 Retail Charity Bonds plc (MCAP) 30/07/2014 7 4.375 F 100 £11 million

XS1066478014 Ladbrokes Group Finance plc 17/06/2014 8.25 5.125 F 100 £100 million

XS1018830270 The Paragon Group of Companies PLC 30/01/2014 8 6.125 F 100 £125 million

XS0997703250 Premier Oil plc 11/12/2013 7 5.00 F 100 £150 million

XS0975865949 A2D Funding Plc 21/10/2013 9 4.75 F 100 £150 million

XS0947705215 Bruntwood Investments plc 25/07/2013 7 6.00 F 100 £50 million

XS0942129957 Helical Bar plc 25/06/2013 7 6.00 F 100 £80 million

XS09194068004 International Personal Finance plc 08/05/2013 7 6.125 F 100 £101.5 million


XS0891023086 The Paragon Group of Companies PLC 03/03/2013 7.75 6.00 F 100 £60 million


ORB dedicated issues - (1)


Listed

Maturity

(year)

Coupon

Value

Coupon

Type

Minimum


XS08805787285 EnQuest PLC 15/02/2013 9 5.50 F 100 £155 million

XS0853358801 Alpha Plus Holdings plc 19/12/2012 7 5.75 F 100 £48.5 million

XS0856594642 UNITE Group plc 12/12/2012 7.5 6.125 F 100 £90 million

XS0859261520 Tullett Prebon plc 11/12/2012 6.5 5.250 F 100 £80 million

XS0841076465 St. Modwen Properties plc 07/11/2012 7 6.25 F 100 £80 million

XS0846486040 London Stock Exchange Group plc 05/11/2012 9 4.75 F 100 £300 million

XS0832324981 Workspace Group plc 10/10/2012 7 6.00 F 100 £57.5 million

XS0827693663 Beazley plc 25/09/2012 7 5.375 F 100 £75 million


XS0820711215 CLS Holdings plc 12/09/2012 7.25 5.50 F 100 £65 million

XS0805454872 ICAP plc 31/07/2012 6 5.50 F 100 £125 million

XS0795445823 Primary Health Properties plc 24/07/2012 7 5.375 F 100 £75 million

XS0796078193 Severn Trent plc 11/07/2012 10 1.30 (IL) IL 100 £75 million

XS0780063235 Tesco Personal Finance plc 21/05/2012 8.5 5.00 F 100 £200 million


XS0731910765 Places For People Capital Markets 31/01/2012 10 1.00 (IL) IL 100 £40 million







Listed

Maturity

(year)

Coupon

Value

Coupon

Type

Minimum


XS0710391532 Tesco Personal Finance plc 16/12/2011 8 1.00 (IL) IL 100 £60 million

GB00B3YYW134 Royal Bank of Scotland 07/11/2011 7 2.00 (V) Variable 1000 £20 million

XS06785224903 National Grid plc 30/09/2011 10 1.25 (IL) IL 100 £282.5 million

XS0635014177 Places For People Capital Markets 27/06/2011 5.5 5.00 F 100 £140 million


XS0604804194 Lloyds TSB Bank plc 25/03/2011 5.5 5.50 F 1000 £150 million

XS0602217159 European Investment Bank 11/03/2011 5.5 3.25 F 100 £350 million

XS0591029409 Tesco Personal Finance plc 25/02/2011 7.5 year 5.20 F 100 £125 million

GB00B42SH312 Royal Bank of Scotland 21/02/2011 6 year 2.00 (V) Variable 100 £10 million

GB00B442CZ84 Royal Bank of Scotland 17/01/2011 7 year 3.30 F 100 £15 million

GB00B4MTS3172 Royal Bank of Scotland 06/12/2010 10 year 0.00 (V) Variable 100 £35 million

GB00B4RM3T66 Royal Bank Of Scotland plc 01/11/2010 12 year 3.90 (V) Variable 100 £20 million

GB00B4P95L571 Royal Bank Of Scotland plc 01/11/2010 12 year 3.90 (V) Variable 100 £35 million

XS0517466198 Lloyds TSB Bank plc 21/06/2010 5.25 year 5.375 F 100 £75 million

XS0496412064 Provident Financial plc 15/04/2010 10 year 7.0 F 1 £25.2 million

GB00B3N3WC23 Royal Bank of Scotland 01/02/2010 10 year 5.10 F 100 £50 million

Issuer National Grid plc

Sector Utilities

Shares listed Yes

Issue date 30 September 2011

Issue size £282.5 million

Coupon 1.25% IL

Maturity 10 year

Status Senior, Secured

Lead Manager Evolution Securities Ltd / Barclays Bank plc

Authorised

Distributors

Barclays Stockbrokers, Charles Stanley, Killik

& Co, Redmayne Bentley, Selftrade, Smith &

Williamson, Williams de Broe

Case study (1) National Grid plc


Case study (2) EnQuest plc


Issuer EnQuest PLC

Sector Oil & Gas

Shares listed Yes - FTSE 250

Issue date 15 February 2013

Issue size £145 million

Coupon 5.5% Fixed

Maturity 9 year

Status Senior, Unsecured

Lead Manager Numis Securities

Authorised

Distributors

Barclays Stockbrokers, Brown Shipley, Killik

& Co, Redmayne-Bentley, RIA Capital

Markets, Selftrade, Smith & Williamson,

Stocktrade

Issuer London Stock Exchange Group plc

Sector Exchange Industry

Shares listed Yes - FTSE 100

Issue date 5 November 2012

Issue size £300 million

Coupon 4.75% Fixed

Maturity 9 year

Status Senior, Unsecured

Lead Managers Barclays, Lloyds, RBS

Authorised

Distributors

Barclays Stockbrokers, Charles Stanley,

Halifax Sharedealing, Hargreaves Lansdown,

Killik & Co, Numis Securities, Peel Hunt,

Redmayne Bentley, Selftrade, Shore Capital,

Smith and Williamson, Stocktrade

Case study (3) London Stock Exchange Group plc


Contact us Fixed Income Team

London Stock Exchange

[email protected]

Tel: +44 (0)20 7797 3921

Page 18


Phil Caroe, Allia


Overview

Designed to raise:

> £10-50 million

> unsecured, lightly covenanted loan finance

> at a fixed rate

> for 5-10 years

> from mainstream ethical investors


Issuing listed bonds

To issue a listed bond, issuers must:

> be a plc

> comply with the Prospectus Rules

> ensure ongoing compliance

Retail Charity Bonds makes listed bonds

possible for charities at affordable cost


Retail Charity Bonds

> Special purpose issuing vehicle

> Independent credit review

> Standardised documentation

> Bond administration managed by Allia


Who is it for?

> Established UK charities

> Strong revenue generation

> Sufficient asset cover

> Planning asset purchase / development /

refinancing

> Track record of impact


Process

Application

Due diligence

RCB plc

decision

Arrangement

UKLA

submission

Receipt of

funds

Roadshow

Offer period

0 1 2 3 months


Contact

Phil Caroe, Director of Social Finance

[email protected]

01223 781303

07896 122441

[email protected]

Allia Bond Services Limited (“ABS”) (company no. 9033937) is a trading company of the charity Allia Ltd, a community

benefit society registered under the Industrial and Provident Societies Acts (No. 28861R). Both ABS and Allia Ltd have

their registered office at Future Business Centre, King’s Hedges Road, Cambridge CB4 2HY.


Henrietta Podd

Canaccord Genuity

What is a Retail Charity Bond?

> A way of raising term debt via a regulated market

> By offering a simple, transparent security

> Attractive to a very wide range of investors

> Retail investors – wealth managers & individuals

> Supporters and donors

> Other charities and Specialist SRI funds

> Pension funds and other wholesale investors


What investors want

Bond features:

> Mainstream fixed income bonds

> Listed on London Stock Exchange

> Commercial return (4 - 4.5%)

> Medium tenor (5 - 10 years)

> Unsecured, light covenants

> No rating needed


Distribution

> Managed by Canaccord

> Using prospectus and authorised marketing materials

> Roadshow event for institutional investors and retail intermediaries + one to one meetings

> Authorised distributors alert clients to launch

> PR campaign to notify wider public

> 2 - 3 week process

> Pricing driven by demand

Distribution

Charity money

9%

Execution-Only Broker

17%

Institution 33%

Ethical/SRI 18%

Stockbroker/wealth manager

23%

HPCHA GOLDEN LANE


Contact

Henrietta Podd, Managing Director

[email protected]

DDI: 020 7523 8020 M:07939 117614 Neither the whole nor any part of the information in this pitch/presentation may be disclosed to, or used or relied upon by, any other person or used for any other purpose and, in particular,

should not be distributed outside the United Kingdom, without the prior written consent of Allia. The material contained herein may include unpublished price sensitive information, the misuse

of which may result in criminal and/or civil proceedings against you.

None of the information on which this pitch/presentation is based has been independently verified by Allia or Canaccord Genuity or any of their connected persons. Accordingly, neither Allia,

Canaccord Genuity nor any of their connected persons accepts any liability or responsibility for the accuracy or completeness of, nor makes any representation or warranty, express or

implied, with respect to, the information on which this pitch/presentation is based or that this information remains unchanged after the issue of this pitch/presentation.

No duty of care or otherwise is owed by Allia, Canaccord Genuity or any of their connected persons to any other person in relation to this pitch/presentation.

This presentation has been prepared on the basis and assumptions described herein. This presentation is not intended to provide the basis of any investment decision and should not be

considered as a recommendation by Allia, Canaccord Genuity or any of their connected persons to any recipient of the presentation. No person has been authorised to give any information

not contained in this presentation. Nothing in this pitch/presentation is, or should be relied on as, a promise or representation as to the future.

In this notice, “Allia” means Allia Ltd, “Canaccord Genuity” means Canaccord Genuity Limited and “their connected persons” means, the respective holding companies of Allia Ltd, Canaccord

Genuity Limited or their shareholders, subsidiaries and subsidiary undertakings of such holding companies and their respective directors, officers, employees and agents of each of them.

Retail Charity Bonds:

the experience of

Golden Lane Housing

Alastair Graham

Director of GLH

25th June 2015

Golden Lane Housing (GLH)

• Leading national charity providing housing for people with a learning disability

• Established in 1998 by Mencap, now owns and leases 700 properties across England and Wales which are home to 1,500 tenants with a learning disability

• Historically able to get public grants and private loans

• Provides specialist housing management and maintenance but not personal support and care

• Works with over 100 local authorities and support providers

• Rental income pays for management, maintenance and servicing our capital

The opportunity

• Private investment: institutional and retail

• Low interest rates and low inflation = good macro economic climate for bonds

• Capital asset: 500 properties = £83m

• Reliable rental income stream: £11m pa

• Track record

Previous GLH Bonds

2003

• 10 year bond at RPI plus 1% raised £1.8m

2013

• 5 year bond at 4% fixed rate raised £10m

• Mainly from charitable trust funds and social investors: not much left!

• But lots of individual investors too

• Good publicity: importance of the brand

• Little liquidity: not listed

2014

• where to get substantial new investment?

Listing on London Stock Exchange

• Provides ‘liquidity’ as investors can sell anytime during the term

• Attracts investors so can raise larger amounts and/or offer lower rate/longer term

• GLH cannot list as we’re a charity –need to be a public limited company (plc)

• Retail Charity Bonds (RCB) plc was established in 2014

RCB plc

• Innovative new platform for social organisations to issue listed bonds

• GLH was the first ever listed charity bond in June 2014

• Raised £11m in less than two weeks (had to close early to avoid being over-subscribed)

• 4.375% fixed rate for seven year fixed term (extendable to 9 years at GLH’s sole discretion)

Why did it work?

Investors

• Good rate

• Net asset covenant

• Listed

• Reliable income

• Track record

• Ability to re-finance at end of term

GLH

• Good rate

• No security needed

• No deposit needed

• Reliable income

• Track record

• Ability to re-finance at

end of term

Great publicity

• Increasing awareness of issues to do with learning disability and housing

• Positive images and coverage

• Challenging stereotypes of learning disability

• Raising the profile of GLH and Mencap

What is the money being spent on?

• Buying and adapting over 30 new houses and bungalows across England and Wales

• These will become homes to over 100 people with a learning disability

• Spent £9m so far: 24 properties, 84 tenants

• A lasting legacy for the future

• Social impact report: increased confidence, independence, learning new skills, wider social network, participation in the community and better health. Much improved health of the parents

Risks

• Rental income stream: voids, housing benefit

• Net asset covenant

• Ability to re-finance in 2021

• Cost control: maintenance, interest rates, inflation

Innovation

• A new way of harnessing substantial private money for public good

• Many more social organisations can use the RCB platform

• Shows private investment institutions and individuals how to invest for good

• Real alternative and addition to public grants and conventional private loans

• Capable of being replicated on a much greater scale

Get in touch

Alastair Graham, Director

Call 0300 0037 007

Email [email protected]

Twitter @alastair234

@GoldenLaneHouse

#GLHBond14

mailto:[email protected]

Documents

Retail Charity Bonds - London Stock Exchange of ORB Page 8 London Stock Exchange • In February 2010, the London Stock Exchange launched its new electronic bond market for retail