Risk Summary

Helping Investors To Understand The Risks

Investing in WiseAlpha Investment Bonds does carry risk and investors need to ensure that they have considered and understood all of the risks before deciding to invest in WiseAlpha Investment Bonds. Investing in WiseAlpha Investment Bonds mean that investors are lending money to WiseAlpha Investment Limited. Investors will not become shareholders or have any ownership stake in the company. Instead, subject to the risks that we describe here, investors will receive interest and at the end of the term of each WiseAlpha Investment Bond (when it matures), their initial investment amount back.

It is important to understand that WiseAlpha Investment is solely responsible for its financial status and consequently its ability to pay interest and return investor capital when the WiseAlpha Investment Bonds reach maturity.

Loss of investment and/or interest payments

Like all businesses, WiseAlpha Investment Limited is vulnerable to financial difficulty and investing in WiseAlpha Investment Bonds involves the risk of WiseAlpha Investment becoming insolvent. Should this happen, investors may lose some or all of their initial investment or all of any outstanding or future expected interest payments.

Even though we have put what we believe to be comprehensive risk processes in place to help mitigate the risk of financial difficulty, it is important that investors understand that such a risk exists. WiseAlpha Investment Bonds are not protected by the Financial Services Compensation Scheme (FSCS). There are two types of relevant FSCS protection: deposits and investments. Deposit protection applies when money belonging to investors is held in a segregated Client Account. With investments in WiseAlpha Investment Bonds, this occurs initially when investor money is transferred to us to make an investment and when interest payments and the repayment of capital are being made. While the money is in a segregated Client Account (which is likely to be a short period) it is protected by the FSCS deposit protection which is currently £85,000 per person. This Client Account is operated by Global Custodial Services Limited and is held with Lloyds Bank plc.

Repayments of principal and interest will be made to the segregated Client Account. Should investors have any complaint about WiseAlpha Technologies Limited (which has approved the Information Memorandum for the purpose of FSMA 2000), the operator of the Client Account, that we are unable to resolve to the investors satisfaction, it may be possible to raise these with the Financial Ombudsman Service (“FOS”). For more detail on the FOS and their eligibility criteria see their website http://www.financial-ombudsman.org.uk/ . We always welcome, and prefer, the opportunity to handle any concerns investors may have directly so please contact us at investing@wisealpha.com.

Committing to a fixed term

Investors are committing their money for the length of the WiseAlpha Investment Bond’s duration and so it is important they understand they cannot liquidate investments early unless their Investment WiseAlpha Investment Bonds are redeemed by WiseAlpha Investment Limited. Investors should bear this in mind when deciding the amount they are happy to invest and the term of the WiseAlpha Investment Bonds selected.

The WiseAlpha Investment Bonds shall not be dealt in or negotiated on any stock exchange or other recognised or capital market in the United Kingdom or elsewhere and no application has been or will be made to any recognised Investment Exchange for the listing of, or for permission to deal in, the WiseAlpha Investment Bonds.

Early call risk

WiseAlpha Investment Limited has the right to repay its WiseAlpha Investment Bonds early. Should this happen WiseAlpha Investment Limited would return the money the investor initially invested and the amount of interest that has been earned and not paid up to that date. This right is included in the Terms and Conditions.

Interest rate and inflation risks

WiseAlpha Investment Bonds pay interest at a fixed rate rather than at a variable rate that can change during the life of the WiseAlpha Investment Bond. Fixed rates remove the uncertainty associated with variable rates – however, there is a risk that fixed rates become less attractive if interest rates available elsewhere go up whilst an investor is invested in the WiseAlpha Investment Bond. Similarly, high inflation could adversely impact investors “real” (inflation adjusted) return over time.

Business risk

As with all businesses, good management of WiseAlpha Investment should mean better financial performance. Poor financial performance may impact WiseAlpha Investment Limited’s ability to repay the interest and capital due to holders of WiseAlpha Investment Bonds and so it is important for investors to understand the risks. The success of the business depends on a variety of factors which include the quality of its customer base, the quality of its revenue streams, the value of any assets held as security, and their liquidity.

Credit risk

If corporates fail to make the Loan or bond payments that they owe to WiseAlpha Investment Limited or to WiseAlpha plc under the Fractional Bonds programme in which WiseAlpha Investment Limited may also co-invest; WiseAlpha Investment’s ability to pay interest and capital to holders of WiseAlpha Investment Bonds could also be affected. Although WiseAlpha Investment focuses on lending investments in large companies who tend to be better prepared for changes in economic factors (such as interest rate changes, inflation, political and regulatory changes, etc.) there is still a risk that these factors can affect the borrowing companies WiseAlpha Investment lenders to or other company specific risks which they face.

Balancing investments with repayments

Fully investing the bond proceeds in credit assets is an important part of generating enough revenue to make the interest payments to holders of WiseAlpha Investment Bonds. At the same time, WiseAlpha Investment needs to time the sale or receipt of proceeds from its lending in such a way that it has, at any one time, enough money to make any payments due to holders of WiseAlpha Investment Bonds. If WiseAlpha Investment does not achieve this balance effectively, this could impact on its ability to meet payments due to holders of WiseAlpha Investment Bonds.

Economic risk

The businesses which WiseAlpha Investment lends to (or is entitled to receive payments from) are subject to UK-based economic risk.

If there are adverse changes in the market or in the macro-economy this could cause WiseAlpha Investment Limited to generate less income than expected which could in turn impact its ability to make payments to holders of WiseAlpha Investment Bonds.

Conflicts of allocating deal flow between different WiseAlpha group entities

WiseAlpha plc which operates the main Fractional Bonds programme on the platform may be interested in lending investments which are relevant for WiseAlpha Investment Limited. As a result, a deal allocation policy is in place to ensure that a set process is followed which seeks to balance all interests involved.

IF ISA Legislation

The amount investors can invest into an IFISA each year is decided by the Government. Currently ISA investments are free from capital gains tax and income tax. These benefits may be changed by the Government in the future and investors should make sure that they understand any changes that are made. Once investors have invested the maximum they can’t make any further contributions in the tax year. This means that if investors withdraw money from their ISA they will not be able to pay it back in if they have reached their annual subscription limit. If investors decide to transfer an ISA from one company to another they will need to do this as an ISA transfer rather than take money out and pay it back in again. Investors can transfer cash to an IFISA from an existing cash or stocks and shares ISA. If investors choose to transfer cash from a stocks and shares ISA, they may be required to sell current investments.