Risk Management - Minerva
We take the security of our investors' money very seriously. However, as with any investment, there is some level of risk involved.
Please note that your capital and interest is at risk and are not covered by the Financial Services Compensation Scheme.
What risks should I consider?
Minerva’s performance may be affected by changes in legal, regulatory and tax requirements as well as overall global financial conditions. Please consider the potential risks involved before deciding to invest. Possible risks include:
The ability of the Issuer to meets its payment obligations under the Bonds will be adversely affected by defaults or failure by the borrowers to make timely payments of interest and principal under such underlying borrower loans.
The Issuer is inherently exposed to risks arising from changes in the credit quality and the recoverability of amounts due from underlying borrowers. Adverse changes in the credit quality of the borrowers could result from a general deterioration in the UK economic conditions or increases in the interest rates and borrowing costs within the UK economy. Increased numbers of defaults by the borrowers may reduce the recoverability and value of the Issuer’s assets.
The Issuer’s ability to meet its obligations in respect of the Bonds, its operating expenses and its administrative expenses is wholly dependent upon (i) payments of instalments by borrowers, (ii) payments under any security in respect of the borrower loans backing that Series, (iii) any available cash resources, and (iv) the performance by all of the parties (other than the Issuer) of their respective obligations under the relevant agreements.
There is a risk that in the future, the Collateral Manager is not able to arrange the sale of borrower loans to the Issuer. This may in turn be detrimental to the Collateral Manager’s goodwill, profitability and the Collateral Manager’s future growth potential which is turn could affect the Issuer’s ability to pay interest and principal on the Bonds.
As the Collateral Manager partly relies on brokers and distributors in order to source new lending and identify third party lenders, if there is a significant period of time when funding is unavailable on commercially acceptable terms, there is also likely to be an adverse effect on the Collateral Manager’s relationships with its brokers, dealers and key introducers. As a consequence, the Collateral Manager’s ability to generate new business from brokers and distributors in the future, should funding become more readily available, may be more challenging. This could have a material adverse impact on the Collateral Manager’s business, results of operations, profitability or financial condition.
The success of the business of the Collateral Manager is dependent on recruiting, retaining and developing appropriately skilled, competent people at all levels of the business (for example, relationship managers responsible for key introducers). If the Collateral Manager is not able successfully to attract and retain such personnel or ensure that the experience and knowledge of key management is not lost from its business during the succession of personnel, it may not be able to maintain its standards of service or continue to grow its business as anticipated.
The loss of such personnel, and more particularly the failure to find suitable replacements in a timely manner, the inability to attract and retain additional appropriately skilled employees, or the failure to plan succession effectively, could have an adverse effect on the Collateral Manager’s business.
The Bonds are not protected by the FSCS or any other government savings or deposit protection scheme. As a result, the FSCS will not pay compensation to an investor in the Bonds upon the failure of the Issuer. If the Issuer goes out of business or becomes insolvent, investors may loss all or part of their investment.
Bonds may have no established trading market when issued, and one may never develop. If a market does develop, it may not be liquid. Therefore, investors may not be able to sell their Bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Bonds that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Bonds generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of the Bonds.
The Issuer’s ability to implement its business effectively may be adversely affected by factors that it cannot currently foresee, such an unanticipated costs and expenses, technological change or a severe economic downturn. All of these factors may necessitate changes to the business described in the Information Booklet.