Supercar ‘mini-bond’ launched for sophisticated investors with a passion for luxury cars
By Ray Massey For Thisismoney.co.uk
Published: 13:46, 26 December 2016 | Updated: 13:46, 26 December 2016
If you’re fairly rich, feeling flush and fancy a flutter this Christmas or New Year, supercar dealer Alex Prindiville may have the answer.
You could of course plump for one of the so-called ‘Holy Trinity’ of rare exotic wheels – Ferrari’s LaFerrari; the McLaren P1 and the Porsche 918 which are collectively worth more than £4million – and which he recently had together in his showroom in London’s Limehouse.
However, for automotive fans fed up with the paltry interest rates from banks and building societies, Prindiville has just launched the UK’s first supercar ‘mini-bonds’ costing from £50,000 each.
In return for the high octane investment, purchasers are being offered annual income of 7.5 per cent.
The bond aims to raise Prindiville around £12million and is secured against Prindiville plc’s stock of cars which he says will grow to exceed 120 vehicles, some in the £1million price range. They include Ferrari, Lamborghini, McLaren, Porsche, Rolls Royce and Maserati models.
Tesla-driving Prindiville, 42, a married father of three, grew up in London’s Edgware, left school at 16 and trained as an engineer and learned how to restore classic and performance cars before setting up his dealership. He launched the bond after a wealthy client expressed an interest in investing in his company and suggested he create a suitable structure safe enough to allow him to do so.
Prindiville says the super cars such as the McLaren P1 – of which only 375 were produced – have more than doubled in value since its launch and the P1 now sells for around £1.7million.
He said: ‘Our customers are cash rich and time poor. They’ll wake up one morning and say ‘I want one of those.’
He said his ‘Prindiville Bond’ aims to provide investors a gross return of 7.5 per cent per annum, paid every six months, with a return of their capital at the end of the five-year term.’
However financial experts point out that any would-be buyers should be aware that such bonds are a high-risk investment, lightly regulated, cannot be traded, and some have failed.
Prindiville said: ’It has been designed for sophisticated investors with a minimum investment of £50,000, especially those with a passion for luxury cars.
‘Investors who put in a minimum of £100,000 will have access to exclusive events at Prindiville’s London showroom and be able take part in track days, experiencing the thrill of driving the world’s most sought-after super cars.’
He said the firm aims to move to a new, larger showroom once sufficient profits have been achieved from the business.
He said: ‘The UK and global luxury markets have been both my workplace and passion for over 20 years.
‘Our investors will be supporting a new and innovative British company.’
He added: ‘At the heart of the Prindiville proposition is our ability to identify and then source cars that will be in high demand, often at significant discounts to their market value.
‘The demand is outstripping what I can keep up with. I am turning business away because I haven’t got the capital.”
‘Some of the stock will be selected to offer conventional near-term returns, but a significant percentage will be targeted for medium to long-term investment potential’.
Describing how the ‘asset-backed’ supercar mini-bond works, Prindiville plc said: ‘The bond is a debt instrument allowing the company to raise money directly from investors. It is aimed at sophisticated, High Net Worth investors. For the minimum £50,000 investment, a total return of £68,750 return can be expected at the end of five-year term, including the initial capital’.
It said NCM Fund Services Limited, which is authorised and regulated by the FCA, has been appointed as Security Trustee for bondholders: ‘Under the terms of the bond offering, the capital must be used for the purchase of new stock and further investment in the company. Prindiville plc has put in place a floating charge so bondholders have a charge over all its assets and ultimate security over its stock of cars’.
The ‘Holy Trinity’ are among the rarest cars in the world; only 500 models of the LaFerrari were built – 499 went on sale and one was given as a gift to the Pope; 375 P1s, which go from 0-124mph in 6.8 seconds; and 918 models of the Porsche 918 hypercar.
Recent research by Knight Frank said the classic and sports car market has offered investors a 467 per cent return on their investment over a 10-year period – out-performing all other equivalent asset classes – but that the market is starting to plateau.