Alpha Plus Taps Bond Market With Retail Offer for Schools

on Nov 28, 2012

**Sir John Returns to Public Markets with Retail Bond Launch to Raise Funds**

The Times reported on 28 November 2012 that veteran property investor Sir John Ritblat has returned to the public markets to launch a retail bond offer for a collection of independent schools. Sir John is recognised as an elder statesman of the UK property industry and a former chief executive and chairman of British Land (LON:BLND), the country’s second-largest property group by market value. Currently, the 77-year-old investor is the chairman of UK private school company Alpha Plus Group, which owns schools, nurseries and sixth form colleges across the UK in locations including Notting Hill, Tonbridge and Cambridge, providing high-quality education for some 3,600 pupils.

Sir John, whose son Jamie Ritblat’s Delancey Real Estate manages the DV4 property fund that owns Alpha Plus, told The Times: “I have always liked education and been heavily involved in it — and when we bought Alpha we thought it was a very attractive addition to our main business, which is developing shop, offices and homes. We have never looked at Alpha as a blockbuster business, but it is a very steady, sound, asset-backed business where we could look for modest growth.”

On Tuesday, the private school company launched a secured sterling retail bond backed by seven of its nineteen independent schools in an effort to raise between £50 million and £55 million and pay down debts to existing shareholders, Alpha Plus said in statement, adding that any extra proceeds raised by the bond will be used for “general corporate purposes.”

**Offering Aimed at the Man-in-the-Street-Investor**
!m[Veteran Property Investor Ritblat to Raise Funds Through Launch of 5.75% Secured Retail Bond](/uploads/story/915/thumbs/pic1_inline.png)Alpha Plus announced on Tuesday that it plans to issue bonds paying a fixed 5.75 per cent annual return for seven years, with a relatively low entry price of £2,000, increasing in £100 multiples. The bonds will be secured against one of the company’s nurseries and six of its central London schools, including Wetherby School, a pre-prep for boys that educated princes William and Harry, and actor Hugh Grant. The total trading value of the assets will be £84.4 million, the company added.

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According to Sir John’s statement, the offering was aimed deliberately at the man-in-the-street investor. He said: “There has been nothing in the market for people who want to make a modest investment — and here investors will be getting a genuine net yield.”
**Alpha’s Retail Bond Offering – Debut in Industry**
Alpha Plus’s retail bond launch follows a string of bond offerings this year, as companies look to reduce their reliance on banks and diversify their sources of funding. According to research provided to The Financial Times, European property groups have raised €15.4 billion (£12.4 billion) in the first nine months of this year, compared with €8.3 billion (£6.7 billion) in the whole of 2011, through a combination of corporate bonds, private placements and smaller-denomination retail bonds. Yet, according to John Edwards, a director at JC Rathbone, which advised Alpha Plus, the company’s bond offering was not only a debut bond offering backed by independent schools but also was the first secured issue from a property company.
Unlike cash bond deposits, retail bonds are not covered by the Financial Services Compensation Scheme (FSCS), which leaves investors at a greater risk if a firm goes bust.

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