Wasps rugby club targets fans with retail bond issue

The premiership rugby club Wasps is seeking to raise as much as £35m directly from its fans and other individual investors with the issue of a retail bond on the London Stock Exchange this week.

The 148-year-old club is following in the footsteps of the Jockey Club, which raised almost £25m from a retail bond issue two years ago, and Lancashire Cricket Club, which raised £3m through a mini-bond last year.

Wasps is offering an annual return of 6.5 per cent on the seven-year unrated senior bond secured against the 32,600-seat Ricoh Arena in Coventry, which the club bought in 2014. It is seeking to raise between £25m and £35m from the issue.

David Armstrong, group chief executive, said: "We feel we've got a great brand and the ability to take that out to the marketplace and communicate with investors, so a retail bond had a particular attraction for us compared with an institution or a wholesale issue.

"I'm sure fans of the club will be interested in the bond but we think it's attractively structured for retail investors more broadly."

Owned by the London-based Irish businessman Derek Richardson, the lossmaking club is seeking to turn its fortunes round with the renovation of the Ricoh arena - which is also a football and music venue - and bigger audiences in its new home.

Mr Armstrong said that most of the money raised would be used for refinancing, including repaying a £14.4m loan from Coventry City council made to the former operators of the arena. The remainder will go towards development of the Ricoh venue.

Companies including Tesco Bank and the bookmaker Ladbrokes have raised more than £4.5bn from the public since the LSE launched its order book for retail bonds (Orb) five years ago.

Andrew Ramsbottom, research director at broker Tilney Bestinvest, said: "Given the amount they want to raise and the high profile of Wasps I think a retail bond was probably the correct thing to do.

"They are taking advantage of very low yields available in bond markets to refund their business at attractive interest rates. They'd be daft not to at the current rates."

Questions over liquidity and potential rate rises may detract from the appeal of this and other retail bonds for investors, he added.

A special purpose vehicle, Wasps Finance, is being used to issue the bonds, which will pay interest semi-annually with repayment in full on May 13 2022. The minimum initial investment is £2,000; the bonds will be available until May 6 through distributors including Barclays Stockbrokers and Interactive Investor, with trading on Orb due to start on May 14.

The former club of Lawrence Dallaglio, the ex-England captain, Wasps has repeatedly moved homes and was most recently based in High Wycombe before settling in Coventry. It has twice won the Heineken Cup but came close to entering administration before being bought by Mr Richardson in 2013.

Mr Armstrong said that given the club's past financial troubles, he believed a formal entry to the market would help to "build credibility".

"As far as we are aware it's the first time a rugby club has ever done anything like this," he said.

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