“If someone invests £5,000, they could get a break in Morocco. We’re tying savings in to what our customers love.”
Photo: Alamy
By James HurleyLast Updated: 5:47PM BST 28/04/2012
Companies have already tried to tempt investors frustrated by weak returns in the markets by paying dividends in gold and even chocolate.
Now the husband and wife team behind boutique hotel booking business, Mr & Mrs Smith, are launching the first retail bond to pay returns in weekends away.
James and Tamara Lohan are aiming to bypass banks and venture capitalists and raise up to £5m from their customers.
Their four-year “Smith Bond”, which launches tomorrow, will pay a fixed rate of 7.5pc and has a minimum investment of £1,000. Alternatively, bond holders can choose to receive their interest in a “loyalty currency” that can be used for hotel bookings through the site, paid at a higher rate of 9.5pc.
“We looked at the bank and we’ve had a lot of private equity firms wanting to invest, but we’ve got a fantastic following of customers, and the brand is quite well known, so we thought, why not? It’s win win,” Mr Lohan said.
“If someone invests £5,000, they could get a break in Morocco. We’re tying savings in to what our customers love,” Ms Lohan added.
The couple were inspired by other entrepreneurs who have turned to their customers to finance growth.
King of Shaves, the male grooming firm, raised £627,000 through its “Shaving Bond” in 2009 while Hotel Chocolat secured £3.7m in 2010 with a bond that pays dividends in bimonthly deliveries of chocolate.
Mr & Mrs Smith, founded by the Lohans in 2002 after a “disastrous weekend away”, intends to spend the proceeds on new brands, including a family travel business, and on developing new technology.
The company had a £4.4m turnover last year and made a pre-tax profit of around £300,000. However, the group business, which includes an American and Australian subsidiaries, made a pre-tax loss of £748,000.
The company was advised by Fidelitas Capital on the bond issue, which closes on June 22.
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