ASP Invest promotes loan notes offering up to 17.5% per year.
Its website reveals that ASP Invest is reselling loan notes offered by Certain Bridge, via a video with Certain Bridge branding and a passing reference in a general description of loan notes.
Owners of loan notes are debtholders or creditors, of the issuer. Loan notes are commonly referred to as income-producing debt instruments, some of which are secured (as is Certain Bridge’s). -ASP Invest website
Who is ASP Invest?
No details of who is behind ASP Invest are provided by the website.
ASP Invest’s registered business name is ASP Consulting Partners Limited. This is also not disclosed on ASP Invest’s website. (I had to search Companies House for their address.) This puts ASP Invest in breach of UK law, which requires all business to disclose their registered company number on their wesite.
Companies House shows that ASP Consulting Partners is 100% owned by Abdool Saleem Peerbux.
Prior to founding ASP Invest, Peerbux ran a company called Prime Acquisitions Resources Limited, trading as Prime Acquisitions, which promoted investment in rice in Sierra Leone with a 50% return in the first year and a 15% annual income in future years, run by Agri Capital.
Agri Capital (also known as African Land) was part of Capital Alternatives, an illegal collective investment scheme which was shut down by the FCA in 2013.
Before promoting Agri Capital via Prime Acquisitions, Peerbux was a director of The Impact Marketing.com, a “land banking” company that was shut down by the Government in 2010.
How safe is the investment?
For a full overview of the Certain Bridge investment promoted by ASP Invest, see my review last week.
As a quick summary:
These are unregulated loan notes and if Certain Bridge is unable to make sufficient returns from its bridging loans, or for any other reason runs out of money to service its bonds, investors risk losing up to 100% of their money.
Certain Bridge’s claim that its loan notes are “secured” rests on the assertion that when it lends investors’ money to a company, it takes security over that company’s assets with a low loan-to-value ratio.
Investors should bear in mind that it is not enough for Certain Bridge to get its money back from its bridging loans. It needs them to pay Certain Bridge sufficient interest to allow Certain Bridge to consistently pay up to 17.5% a year (simple interest basis) to its investors, while meeting its costs.
Secured lending is not risk-free as there is also the risk that if the underlying borrower defaults, the security cannot be sold for enough to cover the loan.
Investors in asset-backed loans have been known to lose 100% of their money when it turned out that there were not enough assets left 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 Certain Bridge, only illustrating the risk that is inherent in any loan note even when it is a secured loan.
If investors plan to rely on this security, it is essential that they hire professional due diligence specialists (working for themselves, not Certain Bridge) to confirm that in the event of a default, the assets of Certain Bridge would be valuable and liquid enough to compensate all investors.
Should I invest with ASP Invest / Certain Bridge?
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 individual loan note offered by a new startup, 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.
Any investment offering yields of up to 17.5% a year (simple interest basis) should be considered extremely high risk. As an individual, illiquid security with a risk of total and permanent loss, Certain Bridge’s loan notes are much higher risk than a mainstream diversified stockmarket fund.
Before investing investors should ask themselves:
- How would I feel if the investment defaulted 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?
The investment may be suitable for high net worth and sophisticated investors who will already be well aware of all of the above risks, are looking to invest a small part of their assets in corporate lending, have done sufficient due diligence, and feel that the return on offer is sufficient for the risks involved in lending to a new startup company.
If you are looking for a “secured” investment, you should not invest in unregulated corporate loans with a risk of 100% loss.