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February 12, 2016 at 12:06 PM
A new investment vehicle from MBU Capital combines crowdfunding and socially responsible investing to impact community-focused real estate projects across the U.K.
The “Social Bond” focuses on a number of “social property strategies” including affordable housing, community regeneration and high quality housing for students and the elderly.
MBU Capital, a London-based independent investment bank, announced the Social Bond’s global availability on Wednesday. The bond was launched in January.
“Given the way it’s structured, [there’s] no global limitation,” MBU Capital CEO and co-founder Mohammed Iqbal told ThinkAdvisor by phone. “Anyone from anywhere can invest.”
MBU Capital says the Social Bond will offer participants a fixed 7% annual return over three years until maturity in December 2018 and, in addition, give its bondholders a 5% share of net profits from underlying investments.
An additional 5% of profits will go to a charitable cause of the bondholders’ choosing.
MBU Capital has structured its Social Bond as an honor-based pledge by collaborating with the ReGive Global crowdfunding platform. The pledge is then converted into a legally binding contract.
“Most analogous financial instruments, such as muni bonds, retail bonds and corporate bonds, etc., are very restrictive in terms of the regions that they can be marketed within and therefore limit geographies that can participate,” according to MBU Capital.
Once investors complete their social bond application through the ReGive platform, MBU Capital sends them a separate legally binding agreement (enforceable anywhere in the world) that makes their social bond fully protected by MBU’s real estate assets.
By structuring the bond through a global crowdfunded nonprofit organization, the Social Bond bypasses regulatory restrictions that could keep it from going global.
