Platform: So is it to be Eddie Hobbs's Brendan Investments, or the Prize Bond Company, the two latest aspirants honking for funds? Bill Murdochasks.
They couldn't be more different: Hobbs, the self-styled guardian of the little people's investments, has embarked on a high-profile property venture through Brendan Investments and is seeking up to €250 million; the Prize Bond Company is trying to renew interest through a low-profile advertising campaign with the carrot of a new €1 million prize at Christmas.
Which will be around in five or 10 years' time? To have any success, Brendan needs to raise near the upper limit of €250 million and not the minimum €10 million. The Prize Bond Company needs to change its staid image and structure.
It is easy to start with a dollop of cynicism when looking at Brendan, a start-up company with no record whose success will depend largely, not on Hobbs, the public face, but on Vincent Regan, the managing director. However, scrutiny of the prospectus reveals no hidden perks to the founding shareholders - Hobbs, Regan and Hugh O'Neill. They are not, for example, getting shares at a preferred rate.
What is missing is a firm declaration that they will be taking up some of the shares on offer - for every €10 invested, one ordinary share and nine loan notes, with a minimum investment of €5,000. The prospectus says it is "not aware of any intention" to subscribe to more than 5 per cent, which could lead to charges that the founders, whose management company will receive 1 per cent of the gross value of the property assets per annum to run it, are not sufficiently confident in its future. But Regan says they will invest a combined €1 million in the company on a pari passu basis with the other shareholders.
The other benefits that could flow to the founders is a potentially lucrative bonus of 20 per cent of the property gain at the end of the proposed 10-year period - the other 80 per cent goes to the shareholders - provided the value of the investment increases by more than 8 per cent per annum over the period.
The intention is to invest in development and investment properties in the UK, Germany and Portugal, and it will be highly geared, with bank facilities of three times the sum raised, potentially making it a €1 billion company.
It is not the company's intention to seek fresh funds from the shareholders at a later date, but this cannot be ruled out. And a quotation for the shares is a remote possibility, so investors will have to stick with it for the 10-year period.
This is a high-profile, high-risk company. Directed at the mass market, investors are encouraged to borrow to buy the shares. All such companies have a determined life period.
Will accountant Regan be trying to emulate Derek Quinlan who, with a similar background, has had spectacular property successes?
Quinlan had more favourable market conditions and it will be a difficult act to follow. Only time will be the judge.
The Prize Bond Company, jointly owned by An Post and Fexco, is distinctly dull when compared with Brendan Investments, but it could have enormous potential. Gross sales increased by a mere 0.1 per cent last year and have been more or less on a plateau since 2003.
Its relevance in the Government savings market is minimal. According to the latest Central Bank statistics, the €596 million in prize bonds in the first quarter of this year is dwarfed by saving certificates of €3.2 billion (including interest) and index-linked saving bonds of €1.7 billion.
This is in sharp contrast with the UK's premium bonds, which dominate that market.
Why shouldn't the prize bond have the same appeal? At the moment it is a mere agent, sandwiched between An Post, which received €1.7 million last year for marketing the product, and Fexco, which received €3.1 million for administration.
The National Treasury Management Agency manages the fund. It has been paying the Prize Bond Company 2.4 per cent, recently upped to some 3 per cent, to pay bond holders the tax-free prizes. Holders have about a one in 700 chance of winning, compared with National Lottery odds of one in 8.1 million for the top prize.
Prize bonds are unique investments as the capital sum remains intact, with a reasonable chance of a prize.
However, the company is not vigorous in its advertising and there is a staggering number of encashments, amounting to 78 per cent last year.
The Prize Bond Company admits it has to ensure "the relevance of our product". It is in limbo and will stay there unless radical changes are made. Indeed, it could be a much bigger moneyspinner for both the State and the investor.
