A green energy company listed on the Alternative Investment Market (AIM) has become the first stock on the junior market to issue a corporate bond aimed at retail investors, What Investment has reported.
Good Energy Group is to bring to market a bond with a maturity of four years and an annual interest rate of 7.25 per cent. The minimum investment for this bond is £500.
The company hopes to rise between £5m and £15m from investors.
The Good Energy Group is the first company quoted on AIM to issue a retail bond.
The company supplies electricity generated from renewable sources such as wind, solar and hydroelectric power and intends to use the capital raised to fund an expansion of its energy generating capacity.
The interest rate of 7.25 per cent on the Good Energy bond can be topped up by 0.25 per cent if the bondholder remains a customer of the company for the duration of the bond’s lifetime.
While the rate of interest compares well with most sovereign bonds and with cash, it is not a great deal higher than that offered by more established brands such as Tesco, which offered a 5.2 per cent coupon over a similar time period. Commentators have stressed that retail bonds are not risk-free.
With a market capitalisation of less than £30m, Good Energy Group is at the smaller end of AIM. Last year it reported profits of £1.4m on turnover of £28.2m.