BUSINESSES and individuals are to have the opportunity to invest in the Falkland Islands Development Corporation (FIDC) and make a return on their investment over five years, the corporation has announced with the launch of a new initiative.
FIDC Managing Director Zachary Franklin told Penguin News this week the Portfolio Participation Programme (PPP) is an initiative that has never really been attempted anywhere in the Falklands before. It will involve a minimum of £2,000 per subscription “that entitles you to a portion of the interest on our loan portfolio.”
FIDC provides grants and loans and accrues interest on an annual basis, “right now that interest is about 7.75%, so if you were to invest £2,000 pounds… in this scenario, if the interest rate stayed at 7.75%, at the end of the year, you would be paid out a portion that’s commensurate with that £2,000 pound investment of 7.75%. So 7.75% on £2,000 pounds is £155 pounds. “
He continued: “So in this scenario you get £155 pounds, plus £400 pounds back of the original amount that you put into it which is FIDC buying a portion of it back- and we do this over five years. So when you come to the second year, you have £1,600 pounds, still left. Depending on what the interest is for that second year, you will earn a percentage based on whatever the interest rate is on £1,600 plus £400 that we used to repurchase 20% back and we will do that again. So your amount that you originally subscribed to £2,000 – that will slowly be bought back over five years. So £2,000 to £1,600 to £1200 to £800 to £400. And each year you will earn an interest payout based on whatever is remaining in this subscription from FIDC.”
Mr Franklin said FIDC’s aim was to open up 250 lots effectively raising £500,000 pounds total.
An individual can purchase a minimum of one lot at £2,000 pounds. “You can subscribe up to 25 lots as an individual and you can subscribe up to 50 lots as a business.”
The PPP is seen as “a test of a diversifying strategy for FIDC in terms of raising private finance, expanding its own capital by which you can deploy, as well as providing alternative options for individuals and businesses.”
FIDC hopes the public will see it as an “attractive place to put some of your money – FIDC having a big loan portfolio of about £2.6M historically; has a very above average, in fact impeccable track record in terms of maintaining its loan portfolio and no defaults. So FIDC has historically had the interest to do something like this because it can afford to do that.”
He also reassured anyone wishing to invest that FIDC guaranteed a minimum of 5%. The interest rate is currently at 7.75% however.
Regarding what information the investor will receive Mr Franklin said every year prior to the end of June 30 every subscriber business or individual will get a notification of what the interest rate has been whether it is at “say a high amount like 7.75% currently, or it’s the minimum 5%… So you’re either going to get a notification that you’re getting 5% the minimum or something above that, and you’ll get your payout before June 30 of every year.”
He said once FIDC has raised its £500,000 pounds, “we will be looking to allocate that capital to projects. What those projects are at this point we haven’t had FIDC Board approval – what we will be able to do is push forward or accelerate any projects with FIDC Board approval.”
Also in terms of public information he said in their board meetings in the open sections “we will talk about the portfolio Participation Programme and how it’s doing and then eventually what that PPP money will be used for FIDC project wise…”
But how do you get involved?
Mr Franklin said: “we are now open to subscriptions. So if individuals or businesses are interested and want to know more they can contact FIDC directly by email or telephone call. We will set up a meeting, we will walk you through it.
“There’s a simple subscription agreement that every individual signs and what FIDC is doing is from now until June 30 of 2024 we are accepting subscriptions so individuals and businesses have six months to subscribe to the programme starting from July 1, 2024.
“For the next five years, that will be the actual running of the programme. So you will earn your interest payouts from July 1 through June 30 of every subsequent year to the next five years through till 2029.”