Abundance works with companies and councils across the UK who are looking to raise money to support their work delivering the green and socially beneficial infrastructure we need. We help the company or council prepare the investment offer and then, as a company authorised and regulated by the Financial Conduct Authority (FCA), Abundance makes this investment available through our online investment platform.
This means we have a responsibility to both investors and the company or council issuing investments to make sure all the products we offer comply with FCA rules and are communicated clearly and consistently to everyone involved.
While we carefully consider each investment offered on the platform, there is always the possibility that an investment could run in to difficulty and you could lose some or all of your investment. When things do go wrong, we will always work hard to support the company or council in its efforts to achieve the best possible outcome for investors.
Find out more below about the role we have across the life of an investment:
Preparing an investment
Before any investment offer is opened, our experienced investments team carries out extensive and detailed due diligence of the company or council, its governance and the project being considered, as well as reviewing the backgrounds of the directors and major shareholders. This covers the technical, legal, corporate and financial aspects of the investment, plus the legal work to produce the required investor documentation.
Our diligence process looks to establish that it is an investment offer that meets our own criteria as a business (from a risk/financial perspective and also a positive impact perspective) and to fulfil our regulatory responsibilities. Our responsibility is then to make sure investments are appropriate which means that as an investor you can reasonably be expected to understand the risk.
We have a regulatory responsibility to review and verify all of the information made available to investors at the point of the investment off, such as the investment Offer Document, to ensure it is fair, clear and not misleading. This means we make sure the information is written in plain and simple language and any assumptions or forecasts made are reasonable. We make sure the risks for each investment are clear and easy to understand so you can make your own decision.
While Abundance carries out extensive due diligence on any investment prior to it opening for investment on our platform, it is important to understand that this does mitigate the risk of the investment itself and the business raising money may still run into difficulties and lead to a financial loss for investors.
Making an investment
Abundance is regulated to offer investments to our customers, but it is up to you whether you choose to invest. Unlike a bank or an investment fund, we don’t offer the opportunity to pool your money with other savers or investors across a number of investments or make investment decisions on your behalf. Every investment requires you to make the decision for yourself and we do not offer any investment advice.
When making investments on Abundance your capital is at risk and you could lose some or all of your money. Our most important role as a regulated firm is to make sure you understand the risks of investing and make sure you have the information to make an investment decision based on that understanding of the risks.
It is important to understand that the risks for an investment may materialise and there can always be unforeseen risks that could impact an investment. If this happens, the investment could experience a problem which means that you could lose some or all of your original investment or receive a lower than expected return.
An as investor, you are expected to make your own assessment or ‘due diligence’ of an investment and consider all the of the risks in the context of your own financial needs and in particular consider the best way to spread your risk across a number of investments.
Ongoing investment administration
Once an offer is funded our work doesn’t stop. Abundance Investment acts as agent and registrar of each investment on an ongoing basis. This role includes the administration of investment returns, communications between the issuer and investors, and to facilitate the exercise of rights by Debenture holders, for example, where Debenture holders are asked to vote on a change of investment terms.
Our investments team continue to work closely with each company and council after it has raised the money it needs, staying in regular contact with the issuer over the life of the investment.
Keeping you informed about your investments
As well as our due diligence process prior to a new investment raise, we stay in regular contact with an issuing company as part of our post-investment process.
It is the responsibility of the company you have invested in to keep its investors informed and we ask each company to provide a 6-monthly update as a minimum. We remind all of our issuing companies of their contractual obligations under the engagement letter with Abundance and the Debenture Deed with investors, to keep their investors informed with any information that is material to the business and the investment.
We review the investor updates from a company prior to them being sent out to investors, primarily to ensure they are clear and written in a suitable format with sufficient detail for our investors, and ask any questions that might be relevant to our investors if not addressed. However, Abundance is not part of the management team and we don't hold board seats or have observer or oversight rights for the companies that raise money on our platform, so it is the responsibility of the company to ensure they are providing clear and accurate information to their investors.
We provide a ‘status’ for each investment you hold in your Abundance account so you can clearly see if there are any outstanding issues with any of your investments. You can learn more about the different statuses and what they mean here.
Supporting your investments and your rights
Given the important nature of the goals and purpose of the companies raising money on Abundance, including fighting the climate crisis and redressing social issues, we all want to see the investments on our platform achieve the positive impact they set out to achieve and for things to go according to plan.
However, as with any investment, there is always the risk that something may go wrong and a particular investment may not be successful. The reasons for why a particular company or council might be unsuccessful will depend on the type of business or activity and the nature of the issue it experiences. Each investment has its own particular risks, some of which are set out in the Offer Document or Factsheet (although unforeseen risks may always arise), and you should carefully consider these before deciding whether to invest.
Most investors diversify their risk by spreading their investments over a number of companies so the overall impact of one investment running into difficulty is limited. We have offered a wide range of investments on Abundance since we launched in 2012. Some of these investments have been restructured (where the terms of the investment were changed with the approval of investors) after the companies ran in to difficulties, with the aim that the revised investment terms will allow the company to continue and return capital and a return to investors. In some cases the restructuring may simply be an extension of the investment to give the company more time to repay investors, but in other cases the terms of the investment have had to be varied more widely such as changing the rate of return or the amount the company is able to pay back.
The investments on Abundance are debentures (in the case of company investments) or P2P loans (in the case of council investments) which means you are lending money an organisation on agreed terms. As an investor, you are a creditor of that business or council which means that you have a formal claim on the company or council to repay your capital and interest under the terms of the investment. As a creditor of either a company or council, you have rights, although those rights are different when investing in a council.
In the case of being a creditor of a company, you have the ability to call a default if the company is unable to meet its obligations to you. If that business runs into difficulties, Abundance works with the company to put forward clear information to investors on the next steps and the available options. Abundance acts as Agent for each of the investments offered on the platform. This role is primarily an administrative one, intended to facilitate the exercise of rights by Debenture holders, for example, where Debenture holders are asked to vote on a change of investment terms. In many cases, the business may be able to continue but only if the terms of the investment are varied – a process called restructuring. A restructuring might include a change to the interest rate, the length of the investment, or a grace period for the interest payments, amongst other possibilities. Any change of the terms of the investment requires approval from investors (typically, investors holding 75% of the Debentures must approve). If the company wants to restructure the investment, they will present a clear proposal to investors which takes into account the interests of Debenture holders. Abundance then administers a vote by investors (electronically) on the restructuring proposal.
It is up to investors if they want to agree to the terms of the restructuring. It may be the case in these situations that investors decide the best outcome collectively is to support the company financially so that it is able to continue trading or avoid a default which may have serious consequences for the project and for investors.
If a company is unable to provide investors with a suitable proposal, or if the company is unable to continue and is in default of the terms of the investment, investors have the option to call an ‘Event of Default’ (this would also require a vote by investors). This would typically lead to an administrator being appointed to wind up the company, with the aim of maximising as much value as possible for creditors, including Debenture holders. The amount that investors would get back in this scenario would depend on the underlying value of the business and its assets, the ranking of different creditors, and whether Debenture investors have security over any of the assets (or a package of secured assets provided as collateral.
In the case of a local authority, a council cannot be declared bankrupt as it has legal obligations to its residents, so as a creditor, the repayment of your capital and interest will remain an obligation to the council. You can learn more about about what happens if a local authority runs into financial difficulties here.
Unhappy with our service
Abundance Investment is an investment platform authorised and regulated by the FCA. We want to give you the best experience we can, even if one of your investments has run in to difficulties, and we will always try to resolve any issue you have quickly and positively. If you are not happy with our service in any way, you have the right to make a complaint to us.
Once you have given us the opportunity to resolve your complaint, if you are still dissatisfied, you have the right to refer your complaint to The Financial Ombudsman Service (FOS). The FOS is a free service to consumers and clients for the impartial resolution of complaints. You can find out more about our Complaints Procedure here.
The Financial Services Compensation Scheme (FSCS) also covers both the cash and investments you hold on Abundance. Under the FSCS investment scheme, investors can claim up to £85,000 of compensation in the case where Abundance has gone out of business and you have a valid claim against the business. It is important to understand that the FSCS does not offer compensation for poor investment performance. You can learn more about the FSCS and how it relates to Abundance here.