Your capital is at risk and returns are not guaranteed
All the investments on Abundance are debt investments, which means you are lending money to the company or local authority issuing the investment. When you make an investment on Abundance your capital is at risk. If the company or local authority you have lent money to runs into difficulties, it may not be able to pay your returns and you may not get back all or any of your original investment.
The risks to your capital and your returns will be different for each investment you make, and in particular the risks will vary when investing in a company compared to a local authority.
You make the investment decisions
You must choose the investments you want to make on Abundance and each investment will have a different return, length of term and risks that you should consider carefully.
The risks for your investment will depend on the particular company or local authority you are investing into and the terms of that investment. Investments with a higher return are usually correlated with higher risks. You should review all the information provided about a particular investment, including the risks section in either the Offer Document or Factsheet before you decide whether the investment is right for you.
You should consider investing across a range of different investments, issued by different companies and local authorities. By spreading your money over a number of investments you reduce the overall impact if any one of your investments runs into difficulties and is unable to repay your investment.
Investments can be long term
Some of the investments on Abundance are long term. Should your situation change and you need to access your invested money before the investment has reached its term you may not be able to sell your investment (see ‘Selling your investment’ below). There is a risk that changes in the market such as interest rates or the performance of the specific investment will mean the value of your investment could go down as well as up if you choose or need to sell.
Selling your investment
The investments on Abundance are designed to be purchased and held for the full fixed term. The investments on Abundance are transferable which means you may be able to sell them if you need access to your money earlier. Abundance provides a marketplace which enables buyers and sellers to connect and trade investments, but this is informal and is not like a stock exchange or other regulated market. You may not be able to sell instantly or at all if there are no interested buyers and if an investment is in default you will not be able to sell it.
Remember, if you need to sell an investment in a hurry, if interest rates have changed over time or if an investment has performed poorly, you may not get all of your money back.
Market interest rate changes
Interest rates may go up and down over the term of your investment. This may affect the price another investor would be willing to pay if better rates for products with similar features and risk profile are available elsewhere. If interest rates rise, you may not get back all of the money you invested if you need to sell it via the Abundance marketplace.
Secured investments are not guaranteed
Some company investments may be secured against certain assets of the company and its shares or an associated company. This means that in the event the company went out of business, for example, investors would be secured creditors and would be paid out of any proceeds recovered from the value of those assets, ahead of unsecured creditors that rank below them.
However, security does not guarantee repayment and there may be reasons why assets can’t be realised to pay investors. These include where the market value of the assets concerned is insufficient or the costs of realising them make a sale uneconomic.
Abundance goes out of business
Abundance is the registrar and agent for the investments made on the platform. This means Abundance administers the investments including the repayment of capital and interest to investors. There is a risk that the administration of investments made through Abundance could be disrupted if Abundance became insolvent. In particular, the services offered by Abundance may be reduced which could limit your ability to sell your investment. In some situations the marketplace may close which would restrict the liquidity of your investment significantly.
As a firm regulated by the FCA, Abundance must demonstrate how it ensures the investments are administered to their full term and limits any impact to investors. Abundance has a business continuity policy in place that sets out how Abundance would manage the orderly wind down of its business using its ongoing revenues, and we are required to hold an amount of capital in reserve to support this wind down. In addition, in the event that Abundance was unable to conduct an orderly wind down itself, Abundance has contracted global restructuring advisory firm, RSM UK, to step in and administer the outstanding investments.
Abundance is not authorised to provide financial advice to investors and does not do so. It is therefore your responsibility to do your own assessment on whether to invest in a specific investment or not. If you do not understand anything regarding a particular investment please seek independent financial advice.
Past and future performance
The past performance of an investment is not a guide to its future performance and should therefore not be relied on when making an investment. This is particularly important if you are buying an investment through the marketplace. The value of investments may go down as well as up depending on the performance of the investment or market conditions at the time if you are considering selling your investment.
There may be estimated projections or forecasts as to future performance in Offer Documents and Factsheets. Abundance works with the issuer to make sure (as far as possible) that these are reasonable and are supported by objective data but they may still be affected by risks and other factors. There is no guarantee that any business will succeed or meet its objectives. You should consider carefully any predictions and forecasts in the Offer Document and any detailed risk warnings relating to them.