Designing a Non-Conventional Investment Company

Paid post by Cogress

Designing a Non-Conventional Investment Company

Peer-to-peer (P2P) business lending currently dominates AltFi, boasting a transaction volume of £2bn – that’s the same as the transaction volume of Scotland’s commercial property market for 2018[1]. In fact, P2P business lending has more capital to deploy to UK businesses than the British Business Bank, a government owned bank established with the sole aim of increasing the credit available to SMEs. 

For SME property developers, this represents a crucial opportunity. The result of the crash was as devastating for this group as it was for investors; High Street lenders cut back, and securing funding for smaller developments became more challenging. With capital ready to deploy, AltFi platforms answer a real funding need.

Tal Orly, a solicitor and property developer, saw that opportunity. He married up property developers too small for the banks with investors disillusioned by the crash. The result was Cogress, a UK first.

A new kind of product

“Cogress’ aims to provide real answers to real needs,” says CEO Tal Orly. One of the needs in question is financing for property developers. The second is to provide investors with opportunities they wouldn’t find anywhere else.

The company’s focus on SME developments, those that are too small for institutional investors, provides a wealth of opportunity to its investor community. Investors have more choice over where their money goes than they would with a product like a fund, and the platform boasts similar target returns -- albeit with a risk indicator of 6 out of 7.

Cogress’ property expertise has resulted in a rigorous due diligence process, designed to ensure that investors have all the information they need to make investment decisions that align with their goals and risk profiles. You are effectively your own investment manager, with a wealth of information at your fingertips to inform your decision. Every development launched to investors is vetted and meets stringent criteria and yield potential. Of the developments they assess, only 1-in-30 is deemed suitable to be offered to Cogress’ investor community.

Emerging investment trends

Cogress is tapping into evolving investment trends. The proliferation of digitalisation of banking and automation of investing is already changing our expectations as investors, and has undoubtedly driven the rise in AltFi. Perhaps most interestingly of all, today’s investors are increasingly conviction-led and ethical when it comes to their investment decisions[2].

The opportunity to invest in the UK housing industry, to be part of a mechanism that delivers more housing and helps individual developers to scale their businesses, is a huge appeal to many of Cogress’ investors. “We see a number of trends among our community,” explains Tal, “Some favour particular locations, while others will make decisions based solely on the numbers and modelling. Others place confidence in particular developers, and may choose to invest with a developer we’ve worked with before.” 

The company launches at least one new development opportunity a month. The aim is to give investors a variety of investment opportunities. “Our minimum investment amount is £20,000,” says Tal, “Which gives our investors the ability to diversify their portfolios across multiple projects -- or invest in just one and see whether our platform suits them.”

An investor advocate

Cogress continues to represent its investors beyond a capital raise. “We monitor and maintain a degree of control over a project from start to finish. We are responsible for sourcing the development, raising the investment and monitoring the development until it exits. Which, again, helps to ensure our investors’ interests are represented throughout the course of the project.”

“Our investors’ returns are our priority, which means if a development comes to the market at a time when it might not achieve the best value, we will refinance and hold – letting the units out to cover loan interest and delaying exit until the market picks up,” explains Tal. It’s a strategy that has seen the company deliver annual returns of 12%[3], 14.61%[4] and 16.21%[5] on its last three project exits*, a figure to challenge traditional investment instruments.

*Capital at risk.

 

[1]2018. Legg Mason. Investor Insights: Legg Mason. Global Investment Survey 2018. Legg Mason.   

[2]2018. Orr and Penny. 2018 to see over £2bn invested in Scotland’s commercial property. Savills.

[3]2018, Legg Mason Global Asset Management. Rise of the conviction investor: ethics and the search for outperformance driving trends in 2019. Legg Mason.

[4] 2019. The View, Battersea Park Road Phase 1. Source: Cogress Exit Report.

[5]2018. Tudor Road, London, E9. Source: Cogress Internal Exit Report

[6] 2018. Gransden Avenue, London, E8. Source: Cogress Internal Exit Report

 

Learn more here

'This is a Cogress Paid Post. The news and editorial staff of the Financial Times had no role in its preparation'

 

 

Subscribe today

Full access for just £3.37 a week:

• Tips and recommendations - to beat the market 
• Portfolio clinic & Mr Bearbull - build a well-planned portfolio 
• Expert tools - track and manage investments effortlessly
• Plus free delivery to your home or office

Subscribe Now