Praetura Inheritance Tax Planning Service is a non-AIM/unquoted BR product. It is an Alternative Investment Fund, which will invest wholly into Quay Street Trading Limited (Quay Street). The latter will lend money to SMEs through various types of asset-backed or secured lending. It has a target return of 4.5% p.a., after all fees.

The report goes into details of how the investment process works, sourcing and decision-making, exit strategies, post-investment governance and monitoring, fees and more. It also includes Hardman & Co’s unique fee calculation table, allowing advisors and investors to properly investigate their effect.

Why Invest

Positives

• Strategy: To fund asset-backed finance, invoice discounting and other lending strategies.

Issues

• Future diversification:  New lending strategies may be added in the future.

 

Management

Positives

• Team:  The team has a broad range of lending experience within large and small lenders.

Issues

• Track record:  Although the team has an excellent track record to date, it has not yet experienced a full credit cycle.

 

Nuts & Bolts

• Governance: The company board will have one independent director.
• Diversification: The company will lend into existing lending companies and will have excellent diversification from the outset.
• Valuation:  Loans will be valued at face value less impairments, with transactions at NAV.

 

Fees

• Annual fees: There will be a service charge within the company of 2% p.a., plus a management fee of 1%, payable on exit and contingent on a minimum 4.5% p.a. return. Praetura will also benefit from a positive spread on the lending in its operations.
• Other fees:  A 2% initial fee and 1% on all trades; no performance fee.

 

Risks

• Target returns: The target return is 4.5% p.a. Modelling would suggest that, once invested, the company has a good chance of meeting that target, with significant upside or downside unlikely.
• Investment risk:  In common with most products in the non-AIM Business Relief (BR) sector, Praetura targets a lower return than the yield on the underlying assets. It also provides a unique capital buffer, which reduces the risk of credit losses to investors significantly.

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