Halcyon Developments offer a one year unregulated loan note paying a return of 18% after one year.
Introducers are offering special terms such that investments of £50,000 – £100,000 receive 20% over the term and investments over £100,000 receive 24%.
Update 18.07.18: Closed to new investment.
Who are Halcyon Developments Group?
No information is provided on the Halcyon Developments Group website or in the investment literature as to who is behind the business.
Companies House shows that Halcyon Developments Group is jointly owned by the two directors, Robin Barrasford and Alan Bird. Barrasford and Bird are both directors of a range of other companies in the Halcyon group. Halcyon Developments Group was incorporated in August 2016, and has yet to file accounts.
Robin Barrasford is the director of five active UK companies; Halcyon Developments Group Limited, Barrasford and Bird Worldwide Limited (formerly Halcyon Resorts Management Limited), Halcyon Palms Limited, Halcyon Hills UK Limited and Overseas Dreams Limited. None of these companies were large enough to be required to file full audited accounts with Companies House.
Alan Bird is recorded as the director of over 100 UK-registered firms, including the above five and a range of what are apparently special purpose vehicles for holding property.
How secure is the investment?
These investments are unregulated corporate loans and if Halcyon Developments Group defaults you risk losing up to 100% of your money.
The purpose of the loan is to allow SAS Halcyon Retreat (a firm registered in France) to build the foundations of holiday apartments. Once these foundations are built, according to the literature, the developer will be permitted under French Law to accept 34% deposits for the purchase of holiday apartments, and will presumably repay investors’ money from these deposits.
If construction is delayed, Halcyon fails to sell the apartments, or for any other reason Halcyon has insufficient money to service these loan notes, there is a risk that they may default on payments of interest and capital to investors.
Investors’ money is secured on “the three plots of land, any construction on them and full planning rights”.
Before relying on this security, it is essential that investors undertake professional due diligence to ensure that in the event of a default, that these securities are valuable and liquid enough to raise sufficient money to compensate investors if needed, as well as any other creditors that Halcyon has borrowed money from.
Investors should not assume that because the loans are asset-backed, they are guaranteed to get at least some of their money back through sale of the collateral if the issuer defaults. Investors in asset-backed loans have been known to lose 100% of their money when it turned out that the collateral was insufficient to pay investors after paying the insolvency administrator (who always stands first in the queue).
We are not in any sense implying that the same will happen to investors in Halcyon, only illustrating the risk that exists with unregulated corporate loan notes even when they are asset-backed.
Under “Disclaimers” and “Risks” the investment literature states that “this investment may expose an individual to significant risk and risk of losing all property or assets invested” and “ONLY available to certified high net worth individuals and self-certified sophisticated investors.”
In much larger letters on a later page, however, it describes the investment as “Making overseas property safe, secure, profitable and enjoyable”.
Should I invest with Halcyon Developments Group?
This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.
As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money (as the literature states).
Any investment offering up to 24% per annum yields should be considered very high risk. As an individual security with a risk of total and permanent loss, Halcyon Development Group’s loan notes are higher risk than a diversified portfolio of mainstream stockmarket funds.
This particular bond is described as asset-backed. Before relying on the security backing the bond, investors should undertake professional due diligence to ensure that a) the security exists b) in the event of default, the security could be easily sold and would raise enough money to compensate all the investors and other borrowers, after the adminstrator deducts their fees.
Before investing investors should ask themselves:
- How would I feel if the investment defaulted, the sale of the security failed to raise enough money to compensate all investors, and I lost 100% of my money?
- Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
- Have I conducted due diligence to ensure the asset-backed security can be relied on?
If you are looking for a “safe” or “secure” investment, you should not invest in unregulated products with a risk of 100% capital loss.