Recent Press

Merchant Capital deposit plan: Agricultral Commodities

7 March 11

Merchant Capital Limited (“MCAP”) has launched an innovative structured deposit plan linked to a basket of agricultural commodities, the Merchant Capital Deposit Plan: Agricultural Commodities (the “Plan”). The Plan has a term of three years and two weeks and offers investors 18.5% coupon payment on maturity providing the equally weighted basket of commodities is at or above its initial level when the term ends. The Plan is subject to averaging over the last six months of the Plan term (seven observations). This has the benefit of calming erratic or volatile movements in the market.

The Plan’s key features are:


  • A three year, two week term from the investment date.

  • Linked to an equally weighted basket of Corn, Sugar and Soybeans (the “Basket”).

  • On maturity date, the Plan offers investors a coupon of 18.5% so long as the Basket is at or above its initial level when the Plan’s final level is calculated. The return of your capital and the coupon payment is subject to counterparty risk and the coupon payment will be liable to Income Tax at the investor’s marginal rate.

  • The Plan is a structured deposit placed with The Royal Bank of Scotland plc (the “Deposit Taker”). In the event of the Deposit Taker being unable to meet its commitments, the return of initial capital on maturity may be eligible for coverage under the Financial Services Compensation Scheme (up to a maximum of £85,000).

  • Available as a direct investment and for 2010/11 and 2011/12 cash ISAs.

  • Eligibility: individuals, companies, pension funds, trusts and charities.

  • Minimum investment is £5,000 up to a maximum of £2m.

  • The Royal Bank of Scotland plc is rated ‘A’ by Standard & Poor’s as at 25/02/2011.

John Gracey at Merchant Capital commented,

“We are pleased to be offering our first structured deposit plan. This offers investors a potential coupon payment of 18.5% at the end of a three year investment term and provides the comfort of eligibility to claim for coverage of the deposit under the Financial Services Compensation Scheme should the Deposit Taker become insolvent. This is designed to assure the full return of your capital on maturity. The potential coupon payment represents a return (on a simple basis) of 6.16% for each year of the Plan’s term.

“The investment potential of agricultural commodities has featured frequently in recent press articles. Prices have been boosted by difficult climatic conditions and growth in the world’s population as well as the use of some of these commodities in the production of bio-fuels. The coupon payment in the Plan is conditional only on the final six month averaging of the basket of the commodities underlying the Plan being at or above its initial level when the Plan ends in three years and two weeks time.

“Structured products continue to receive a bad press from many quarters. This is disappointing. Merchant Capital is pleased to produce a growing range of structured deposit and structured product offerings which provide significant downside protection to investors together with pay-offs which are clear and easy to understand. I am confident that structured products will continue to play an important role within investors’ balanced portfolios”

Key dates:


  • Direct Investment Close: 12 April 2011

  • Investment Date: 19 April 2011

  • Initial Level: 19 April 2011

  • Final Level: Six month averaging from
    21 October 2013 to 22 April 2014

  • Maturity Date: 6 May 2014

IFA commission: 2.25% of the sum invested. Deposit Taker information, back-testing and suitability statement packs for interested IFAs are available. Please refer to the contact details below or our website at www.merchant-capital.com

ENDS

Merchant Capital Limited is authorised and regulated by the Financial Services Authority (firm no. 220131).

For further information please contact:-

Merchant Capital
0207 332 2205
Sales Team

Notes to Editors – Merchant Capital Limited

MCAP offers a range of attractive and innovative structured products providing either income or capital growth both to individual investors and IFAs. The philosophy of the business is to have a range of products offering differing investment solutions available throughout the year. In addition, the company will undertake joint ventures with other financial organisations, as well as construct bespoke solutions for advisers to white label and for one off investment requirements.

The company offers underlying assets which are both mainstream, such as FTSETM100 based structures, as well as more innovative ones relating to commodities or emerging markets.