Our fund management profits are up 17% this half. Overall, pre-tax profits at GBP133 million are also very high, which is due to unusually strong period for capital gains, which we do not expect to repeat in the second half. Now among the unexpected events that I mentioned earlier, one is actually closer to home. And, since we have not communicated since June 24, I couldn’t go through this presentation without updating you on the implication of Brexit on our Firm. And, put simply, so far there has been very little impact. Looking at various aspects of the business, first of all fundraising, this is mostly positive.
But which is the best? Jordan Wathen has no position in any shares mentioned. This approach is taken most often as a result of the company’s existing capital structure. As a mezzanine investor, you are being asked to lend money to a company when mainstream lenders like banks will not. In fact, I can almost guarantee that manufacturer of your mattress was, at some point, financed by mezzanine lenders. Mezzanine capital is often a more expensive venture capital source for a company than secured debt or senior debt. As a result, by using equity ownership and pi interest, the mezzanine lender effectively defers its compensation until the due date of the security or a change of control of the company. Typically this might be based on a split between current paid interest of around 10-15% to be paid monthly throughout the term of the loan and accrued interest of up to 15-20% paid either at the end of the term of the loan or after 5 years, depending on the length of the term.
John and Dean drove to the proposed site and discovered that, while it was in a high-growth area, the site was not close to public transport or shops. If the borrower goes on to be a massive success, these kickers can pay out to the tune of several multiples more than the amount borrowed. In compensation for the increased risk, mezzanine debt holders require a higher return for their investment than secured or more senior lenders. Mezzanine investing usually operates outside the strict financial services laws that protect you when you invest in superannuation, managed funds or shares. It is important to ask the above questions, do your own research and seek financial advice before you invest in a mezannine investment.