Full Risk Warning

To help you understand the risks involved when investing in Loans, shares, mini-bonds through UK investor Hub, please read the following risk summary. Please be investment risk aware and diversify your investments.

The need for diversification when you invest

Diversification involves spreading your money across different types of investments with different risks to reduce your overall risk. However, it will not lessen all types of risk. Diversification is an essential part of investing. Investors should only invest a proportion of their available investment funds via UK Investor Hub and should balance this with safer, more liquid investments.

Risks when investing in equity, loans or Bonds

Investing in shares (also known as equity) through UK Investor Hub does not involve a regular return on your investment, unlike Bonds and loans which offer interest paid regularly.

Please bear in mind the following particular risks for equity and fund investments:

Loss of investment or tax relief

The majority of established businesses continue to trade and make a profit however they may not scale as planned and therefore investing in these businesses may involve significant risk. It is possible that you may lose all, or part, of your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk and increase the chance of an overall return on your investment capital. If a business you invest in fails, neither the company – nor UK Investor Hub – will pay you back your investment.

Lack of liquidity

Liquidity is the ease with which you can sell your shares after you have purchased them. Buying shares in businesses working through UK Investor Hub cannot be sold easily and they are unlikely to be listed on a secondary trading market, such as AIM, Plus or the London Stock Exchange. Even successful companies rarely list shares on such an exchange. In addition, if you purchase B Investment Shares, these are non-voting shares and may not be attractive to potential buyers.

Rarity of dividends (only relevant if you have purchased shares)

The businesses we promote for investment are established and have historically paid out dividends. Under the new ownership the Profits are more likely to be re-invested into the business to fuel growth and build shareholder value. Each of the Businesses has no obligation to pay shareholder dividends.

Dilution (only relevant if you have purchased shares)

Any investment in shares made through UK Investor Hub may be subject to dilution in the future. Dilution occurs when a company issues more shares. Dilution affects every existing shareholder who does not buy any of the new shares being issued. As a result, an existing shareholder’s proportionate shareholding of the company is reduced, or ‘diluted’-this has an effect on a number of things, including voting, dividends and value.

 

Risks when investing by way of a Loan to the company

Loans are a very different kind of investment to equity and you do not own a stake in the business issuing the loan. Instead, you receive regular interest payments from the borrowing company (the “borrower”) and then return your initial investment back at the end of the loan term (the maturity). Before investing, you must read and agree to the loan terms as these contain the exact terms and conditions, including the interest payments and final repayment time between investors and the company raising the money. It is important to understand that Issuers are solely responsible for their financial status and consequently their ability to pay interest and return investors’ capital when the loan concludes. UK Investor Hub does not issue the loans listed on the UK Investor Hub website and is not responsible for their performance. Loans, even in established businesses represents a high degree of risk and you should be aware of some of the specific risks involved in investing in them.

Loss of investment and interest payments with loans

Issuers of loans, like all businesses, are vulnerable to financial difficultly and investing using a loan may involve significant risk of default, even though all the businesses are established and have a proven track record. In the event of a borrower being unable or unwilling to meet payments of interest and capital, it is likely that you may lose all, or part, of your initial investment and receive no outstanding or future interest payments.

If a business you invest in fails, neither the company you invest in – nor UK Investor Hub – will pay you back your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk.

Loans are not insured by a third party nor are they protected by any governmental authority such as the Financial Services Compensation Scheme. This means that if the borrower becomes insolvent, investors could lose some or all of their money.

Lack of liquidity with a loan

Liquidity is the ease with which you can sell your investments to a third party after you have purchased them. Loans to an established businesses offered through UK Investor Hub may be transferrable if specified in the loan documentation and as standard they can be transferred with eash, however, they will not be listed on any formal investment exchange or secondary trading market such as the LSE ORB and so it may be difficult or impossible to find a buyer to purchase them. Please refer to the individual loan documentation for full details of transferability. Investments in loans through UK Investor Hub should be viewed as a long term and illiquid investment.

Restricted redemption rights with a loan

Issuers of loans set the terms for redeeming your capital. Investors should be aware that they will not be able to redeem their initial investment under any circumstances other than those set out in the terms and conditions of the documentation of an individual loan, meaning their capital will be locked up for the entire term of the mini-bond, typically 3-5 years and should, therefore, be viewed as a long term and illiquid investment. Currently the loans UK Investor Hub offer are redeemable in full giving 3 months notice however other loans may not have the same redemption options.

A Loan is an Unsecured investment

Unless otherwise set out in the Loan documents, loans are typically an unsecured obligation of the borrower, meaning there is no security over the property or assets of the Issuer supporting the repayment of your interest or capital. This means that if a borrower fails, it is unlikely that an investor will have their initial investment or outstanding interest payments returned to them because there is no security over any remaining assets.

Early call risk

The Issuer has the right to repay you your money at any time prior to the formal repayment date. Your investment may be materially curtailed because of this.

Lower in the pecking order on winding up

If an Issuer falls into financial difficulty and goes out of business, other creditors and debt holders with seniority – including fixed charge holders, administrators, employees who are owed wages, banks, and secured debtors – will be compensated first. This means it is unlikely loan investors, whose unsecured investment sits below all of the previously mentioned in the pecking order, will have their initial investment or outstanding interest payments returned to them after higher ranked creditors are compensated.

Interest rate and inflation risks

Loans pay interest at a fixed rate rather than by reference to an underlying index. Accordingly, you should note that a rise in interest rates may adversely affect the relative returns that mini-bonds offer. Further, inflation may reduce the real value of the returns over time.

 

Mini Bonds Risks 

Risks when investing in mini-bonds

Mini-bonds are a very different kind of investment to equity and you do not own a stake in the business issuing the mini-bond. Instead, you receive regular interest payments from the issuing company (the “Issuer”) and then return your initial investment back at the end of the mini-bonds term (the maturity). Before investing, you must read and agree to the Bond Instrument for each mini-bond as these contain the exact terms and conditions, including the interest payments and final repayment time between investors and the company raising the money. It is important to understand that Issuers are solely responsible for their financial status and consequently their ability to pay interest and return investors’ capital when the mini-bonds mature. UK Investor Hub does not issue the mini-bonds listed on the UK Investor Hub website and is not responsible for their performance. Mini-bonds represent a high degree of risk and you should be aware of some of the specific risks involved in investing in them.

Loss of investment and interest payments with Mini Bonds

Issuers, like all businesses, are vulnerable to financial difficultly and investing in mini-bonds may involve significant risk of default, even though all the businesses are established and have a proven track record. In the event of an Issuer being unable or unwilling to meet payments of interest and capital, it is likely that you may lose all, or part, of your initial investment and receive no outstanding or future interest payments.

If a business you invest in fails, neither the company you invest in – nor UK Investor Hub – will pay you back your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk.

Mini-bonds are not insured by a third party nor are they protected by any governmental authority such as the Financial Services Compensation Scheme. This means that if the Issuer becomes insolvent, investors could lose some or all of their money.

Lack of liquidity

Liquidity is the ease with which you can sell your investments to a third party after you have purchased them. Mini-bonds purchased from Issuers through UK Investor Hub may be transferrable if specified in the Bond Instrument, however, they will not be listed on any formal investment exchange or secondary trading market such as the LSE ORB and so it may be difficult or impossible to find a buyer to purchase them. Please refer to the individual mini-bond documentation for full details of transferability. Investments in mini-bonds through UK Investor Hub should be viewed as a long term and illiquid investment.

Restricted redemption rights

Issuers of the mini-bonds set the terms for redeeming your capital. Investors should be aware that they will not be able to redeem their initial investment under any circumstances other than those set out in the terms and conditions of the documentation of an individual mini-bond, meaning their capital will be locked up for the entire term of the mini-bond, typically 3-5 years and should, therefore, be viewed as a long term and illiquid investment.

Unsecured investment

Unless otherwise set out in the Bond Instrument, mini-bonds are typically an unsecured obligation of the Issuer, meaning there is no security over the property or assets of the Issuer supporting the repayment of your interest or capital. This means that if an Issuer fails, it is unlikely that an investor will have their initial investment or outstanding interest payments returned to them because there is no security over any remaining assets.

Early call risk

The Issuer has the right to repay you your money at any time prior to the formal repayment date. Your investment may be materially curtailed because of this.

Lower in the pecking order on winding up

If an Issuer falls into financial difficulty and goes out of business, other creditors and debt holders with seniority – including fixed charge holders, administrators, employees who are owed wages, banks, and secured debtors – will be compensated first. This means it is unlikely mini-bond investors, whose unsecured investment sits below all of the previously mentioned in the pecking order, will have their initial investment or outstanding interest payments returned to them after higher ranked creditors are compensated.

Interest rate and inflation risks

Mini-bonds pay interest at a fixed rate rather than by reference to an underlying index. Accordingly, you should note that a rise in interest rates may adversely affect the relative returns that mini-bonds offer. Further, inflation may reduce the real value of the returns over time.

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