ZP secured direct lending plc investment review – that will be the topic of today’s article.
This review will be a brief. It will answer a simple question – on a risk-adjusted basis, is this a good investment option?
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Introduction what are the basics associated with this investment?
ZP is linked to ZSL, which is a real estate lender. They focus on lending to small and medium sized developers.
As part of the Zenzic Group of companies, they have advised on over $3.1billion worth of transactions since they started.
Investors into the bond are lending to the group to expand. The rate of return is 7.25%, based quarterly, until 2026. They do also have other bonds paying above 7.25%, with some paying over 8% per annum.
The investment is available in USD and GBP, with the majority of investors going for USD offering.
What are the positives associated with this investment
The investment has the following positives
- They have a good track records in terms of projects and paying out investors on time.
- It is focused on one market, the UK, which reduces risks compared to a multi-country approach, where they might have to take on currency and other risks.
- It is an uncorrelated asset, meaning that it can rise when markets fall, and vice versa.
What are the negatives associated with this investment?
The main negatives are:
- On a risk-adjusted basis, there are better investment options for most investors, often in the same sector (UK property or land related investments). The 7.25%+ yield is lower than some other investments out there, with similar levels of risk.
- The investment is mainly locked in, and therefore isn’t easy to sell.
- It isn’t suitable for people who have a cautious attitude to risk.
- The UK is riskier these days than in the past, with Brexit, higher inflation than many other developed economies, lower growth in 2022 and political instability.
Overall, better investments than this exist in the market, for the majority of investors, including in the same asset class.
It is highly likely that investors can get a better option in the market, even if there are positives associated with this investment.
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