Just under a month ago, the Jockey Club released the first sporting retail bond of its kind in the United Kingdom with the aim of funding a refurbishment of the iconic Cheltenham Racecourse. This week, the club announced that the £15 million target has been reached, enabling work to begin on the site.
While planning permission has not yet been granted, club owners and contractors can now seriously begin to prepare for the catalogue of improvements set to transform the home of Cheltenham Festival.
In addition to a new 6,500 capacity grandstand to replace the 1920s constructed private boxes, new bars and toilets will be installed to optimise the race-going experience. The Royal Box will also be upgraded, and new viewing areas will give punters fresh aspects from which to watch the action.
For those choosing to invest in the Jockey Club retail bond, there are several incentives that made this particular financial move highly attractive. Investments can be anything from £2,000 to £100,000 and investors will see returns of 7.75 per cent split between cash and reward points – at a time where interest rates remain low, this could allow private investors to see a much greater return on their investment than waiting for interest to build up in an account.
Furthermore, thanks to the reward points scheme, investors looking to become more involved in horseracing can now spend their returns on Jockey Club events, giving them a significant discount on their day at the races. This also works well for the Jockey Club itself, as it encourages a higher attendance at meetings.
Capita Registrars confirmed that the target amount had been reached the day before the application deadline was reached, yet due to the huge demand by investors the Jockey Club has decided to extend this deadline. Anyone weighing up the pros and cons of purchasing these bonds now has until the 28th of May to make their interest known.
Group managing director of Jockey Club Racecourses, Paul Fisher, expressed his joy at the upcoming work to be undertaken at Cheltenham.
He said; “We’re absolutely delighted to have beaten our target for The Jockey Club Racecourse Bond, which has raised highly-efficient funds for us to invest back into Britain’s second biggest sport through the iconic development we’re planning at Cheltenham Racecourse.”
Retail bonds have become increasingly popular in recent years, with companies such as National Grid, Eddie Stobart and Severn Trent all allowing members of the public to invest in infrastructure for generous returns. It is thought that this is a trend set to continue, as it gives a company the means of attracting high levels of funding at a time when banks have become cautious about business lending due to the unstable economy and recent financial crisis.
With the Government keen to support initiatives which offer firms alternatives to traditional lending, perhaps this story is just a glimpse of the future for British business.
Do you think more companies will look into retail bonds after the very high-profile success of the Jockey Club’s Cheltenham fund?
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