Emerging Markets

New Bond Builds Funding For UK-Linked Emerging Market Countries

Editorial Staff 26 October 2022

New Bond Builds Funding For UK-Linked Emerging Market Countries

Investment links between the UK and India are important. They are likely to gain traction for various reasons, such as the UK's departure from the European Union. Raising finance for business growth in India and similar economies isn't always easy. A debt offering aims to surmount obstacles and open avenues to growth, its backers say.

A bond tapping into demand for capital to fuel businesses in India and other fast-growing nations has been launched. We talk to investors involved with the debt issuance, and consider the trends driving the space.

On 22 September 2022, GAP Trade Finance PLC, a newly-formed UK registered company, listed a Series 1 and 2 of a $2 billion bond due to mature on 31 August 2024. It pays bond holders 10.25 per cent interest per year for the two-year term.  The capital is collaterally insured through AAA Moody’s rated securities, investment-grade security. The bond issuance is arranged, promoted, and overseen by a UK FCA-regulated investment bank. 

GlobeInvest Ventures, an India and UK-based business with a strong focus on real estate, is partnering with GAP Trade Finance PLC to realise the potential of the opportunity.

GlobeInvest Ventures explained to WealthBriefing how the financial programme works. (This news service is also joining GlobelInvest and others for a conference, to be held on 31 October, exploring investment and commercial links between India, Israel and the UK. See here for details.)

Tony Gimple, co-founder and director at GlobeInvest, told this publication that at the core of the venture is provision for funding in businesses and projects in countries such as India and other fast-growing economies with whom the UK has strong investment links, i.e. Commonwealth countries with which the UK seeks to reinforce post-Brexit investment strategies. . 

“The purpose of the bond and the launch event is to encourage free trade, fund infrastructure, trade finance and provide solid guarantees to individual investors,” Gimple said. “We want to help create long-term, intergenerational wealth, through startups, and second-stage growth.”

Proceeds of the issuance are designed to support a variety of UK and internationally-based business and infrastructure projects.

The bond is aimed at professional investors such as institutions and family offices.

Trade finance profits are used to fund the underlying projects; this separates clients’ capital from the project risks. The bond’s capital is collaterally insured by AAA Moody’s-rated securities or other investment grade security held and pledged by an independent trustee, which removes risk of capital loss for bond holders. 

The firm said the programme has been specifically designed to appeal to professional investors at an institutional level.

Given the present worldwide economic demand for debt capital in countries such as India and the confidence in an insured capital raise, GAP expects the bond to be fully subscribed within six months of its release 

GlobeInvest explained that a trade finance bond raising funds for businesses in India and other parts of the world can transform the capital-raising process and meet demands of long-term investors wantng to tap into fast-growing economies and investments.

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