MR & MRS SMITH, the travel publisher and boutique hotel specialist, has taken a different tack to funding its expansion today by launching its first retail bond, which pays interest to investors in the form of holidays.
Husband and wife team James and Tamara Lohan, who founded the business in 2003, are aiming to raise up to £5m to fund expansion in the UK and overseas without the help of bank debt or private equity financing.
“They’re our way of raising the funds we need for our expansion plans while giving our members and supporters the chance to share in the success of our development,” James Lohan, chief executive, said.
The four-year Smith bond offers a fixed rate of 7.5 per cent in cash twice a year, with a minimum investment of £1,000.
Alternatively bondholders can receive their interest in so-called loyalty money and receive a higher 9.5 per cent return, which can then be used toward bookings at any of the 900-plus hotels across the world listed by the site.
Other retailers including chocolatier Hotel Chocolat have enticed investors with capital returns in the form of chocolate, but Mr & Mrs Smith claims it is the first SME retail bond by a travel brand.