UIL Finance Ltd 2028 Zero Dividend Preference ("ZDP") Shares

Euro17

In the absence of any new bond issues, this may interest some....

UIL is a Finance company that use biennial ZDPs as gearing for their investments. The initial Share issue price is 100p with the final redemption price being 152.29p on 31/10/28. This gives a Gross redemption Yield of 5.75% per annum. You are currently able to subscribe through Eqi.

I will probably have a moderate punt, unless someone out there can find a compelling reason why I shouldn't !! Any profit from selling these is classed as a capital gain, so I can hold outside of my SIPP and ISA, but still not pay any tax (I am never close to exceeding my tax allowance).

john

As far as I can see 40% of this company is invested in a company called Somers Ltd based in Bermuda and 60% of Somers is invested in an Australian unregulated finance company called Resimac Group. 20% of UIL is invested in a investment company called Zeta Resources also based in Bermuda, they invest in mining stocks. So essentially you'd be taking a punt on the australian consumer debt market via middle companies each taking their cut and the same kind of scheme for mining companies.

Euro17 if you're a real investor then 'caveat emptor', if you're simply trying to push UIL, then please leave us alone.

colin

A few years ago i was invested in an australian oil company; Range Resources. They went down the pan when the CEO was found to be "fiddling" the company, enjoying an expensive lifestyle at the cost to investors. This is certainly not for me !! Thanks for the update john.

Euro17

Hi John,

I am just a humble investor who has been a member of this site since 2013. There are many threads on this site bemoaning the lack of ORB bond issues over the last couple of years. I was just trying to flag up a new issue (be it a bit left field) that pays 5%+ and is currently being marketed by Equiniti. I was hoping to strike a neutral tone by only giving some bare facts and allow people to do their own research (which clearly, you have done).

frugal

This also caught my eye as I have invested in zeros in the past. They are effectively a form of fixed interest debt and I am aware of UIL finance (formerly Utilico). I am also a longstanding contributor and humble investor who is not looking to promote anything although I appreciate we have to be on our guard. The structure is certainly a little complex and has changed since I last looked at the them when they were a utilities fund investing in emerging markets (this part of the business is still in there somewhere). On the plus side they have always used zeros to borrow and have never defaulted (past performance warning). It does seem that the assets would have to fall quite significantly for these not to be repaid. I wouldn't discount it out of hand and it could be an interesting investment for somebody on this forum and so worth posting.

littlemart

Agreed. The company has traded for at least a decade and seems to issue zeroes every couple of years. I held both the ones maturing in 2014 and 2018 and was happy with the return (as ever past performance is not a guide...) It is not necessarily for widows and orphans but worth posting. Thanks