Crowd funder eyes care home sector with increasing interest
Crowd Bonds, a type of debt-based crowdfunding, are gaining traction in the healthcare investment sector with a particular focus on high quality care homes, according to crowdfunding platform Downing Crowd.
Downing Crowd itself has launched a new £2.5m Crowd Bond for two established care homes in Scotland. operated by Care Concern.
Downing currently has invested more than £45m in 11 care homes. Earlier this year, the Downing Crowd platform also raised £3m for a luxury care home in Edinburgh with the same management team, hitting the target investment within eight days. Investing in this type of market is not entirely new to Downing with the company gradually building its expertise over time after making its first move into the sector back in 1998.
Head of Downing Crowd, Julia Groves, said shifting demographics had created ideal conditions for fresh investment in the sector, but finding the right opportunities required a careful eye.
“With the number of people aged over 85 estimated to increase by 60% between 2014 and 2025, the demand for care homes – and the financing to support it – looks set to increase rapidly in the coming years,” said Ms Groves.
“However, investors should be wary of simply surfing this trend, as there are clear issues in some areas of the sector around the quality of care, which means we have placed very high importance on rigorous assessment and due diligence of the team operating the homes.”
Downing Crowd Bonds are a type of debt-based crowdfunding that allow investors to lend directly to a wide range of UK businesses via bonds that are secured against the operational assets of the borrowing company. This is often known as an ‘asset-backed’ bond and means that if the borrower defaults on the bond, Downing can sell these assets to help ensure investors get their money back.
This latest asset-backed care home bond launched by Downing will allow investors to earn up to 6.25%p.a. interest over 18 months and there is also the opportunity to earn this interest tax-free if an investor opens a Downing Innovative Finance ISA.