Risk Warning

All investment products carry risks. The LGB Deal Hub is aimed at experienced investors who are classified as either sophisticated or high-net-worth individuals and have the knowledge and experience to make their own investment decisions. Before you make any investment, you should make sure that you fully understand the risks and you should determine whether the investment is appropriate for you on the basis of all the information available to you.

We have listed the general risks below:

Risks when investing in equity

1. Loss of Capital

Most early-stage businesses and many other growth-focussed businesses fail, and if you invest in a business displayed on the platform, it is significantly more likely that you will lose all of your invested capital than you will see any return of capital or a profit. You should not invest more than you can afford to lose without altering your standard of living.

2. Tax Advice

Tax reliefs are not guaranteed and may be subject to change in the future. We recommend that you take your own tax advice on any investments which you make via LGB Deal Hub.

3. Past Performance

The value of investments can go down as well as up and if you invest you might not get your money back. Past performance is not necessarily a guide to future performance.

4. Illiquidity

Almost all investments you make in businesses displayed on the LGB Deal Hub will be highly illiquid.

In general, AIM companies have lower levels of liquidity than companies listed on larger exchanges, which can make it harder for investors to sell shares whenever they want.

For unquoted companies it is very unlikely that there will be a liquid secondary market for the shares of the business. This means you should assume that you will be unlikely to be able to sell your shares until and unless the business floats on a stock exchange or is bought by another company; and, even if the business is bought by another company or floats, your investment may continue to be illiquid. Even for a successful business, a flotation or purchase is unlikely to occur for a number of years from the time you make your investment. For businesses for which secondary market opportunities are available, it can be difficult to find a buyer or seller, and investors should not assume that an early exit will be available just because a secondary market exists.

5. Rarity of Dividends

Businesses of the type displayed on LGB Deal Hub rarely pay dividends. This means that even if a business is successful, you are unlikely to see any return of capital or profit until you are able to sell your shares. Even for a successful business, this may be unlikely to occur for a number of years from the time you make your investment.

6. Dilution

Any investment you make in a business displayed on LGB Deal Hub is likely to be subject to dilution. This means that if the business raises additional capital at a later date, it will issue new shares to new investors, and the percentage of the business that you own will decline. These new shares may also have certain preferential rights to dividends, sale proceeds and other matters, and the exercise of these rights may work to your disadvantage. Your investment may also be subject to dilution as a result of the grant of options (or similar rights to acquire shares) to employees, service providers or certain other contacts of the business.

7. Diversification

If you choose to invest in businesses of the type displayed on LGB Deal Hub, such investments should only be made as part of a well-diversified portfolio. This means that you should invest only a relatively small portion of your investable capital in such businesses, and the majority of your investable capital should be invested in safer, more liquid assets. It also means that you should spread your investment between multiple businesses rather than investing a larger amount in just a few.

8. Convertibles

A convertible is an investment for equity in a company where shares will be issued at a future date. Usually, the shares will be issued when the company completes a larger round of investment. A convertible allows a company to raise equity finance without setting a valuation – the valuation will be set by the subsequent investment round or at an agreed valuation on a longstop date.

It is important to remember that investing in a convertible is the same level of risk as investing directly for equity in a start-up company and your capital remains at risk.

It is also important to remember that the terms of convertibles can vary from deal to deal and it is important that you read the summary of terms and the convertible document provided to you.

Risks when investing in medium term note (MTN) programmes

1. Loss of Capital

In the event that an issuer becomes insolvent, you make lose some or all of your investment. If an issuer you invest in fails, neither the company you invest in – nor LGB – will pay you back your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk. MTNs are not insured by a third party nor are they protected by any governmental authority such as the Financial Services Compensation Scheme.

2. Tax Advice

Any income you earn from your investments in MTNs forms part of your overall income that is subject to personal or corporation taxation rules. If you are in any doubt about your tax position you should seek independent tax advice.

3. Past Performance

Past performance is not a reliable indicator of future results and investors may not recover the full amount invested.

4. Illiquidity

There is unlikely to be material liquidity for the MTNs. Accordingly, investors may be unable to sell their MTNs when desired or at a price level which allows for a profit comparable to similar investments with an active and functioning market. Lack of liquidity in the market may have an adverse effect on the market value of the MTNs.

Issuers of MTNs set the terms for redeeming your capital. Investors should be aware that they will not be able to redeem their initial investment under any circumstances other than those set out in the documentation of an MTN. Therefore, the capital will be locked up for the entire term of the MTN, typically 1-3 years and should, therefore, be viewed as a long term and illiquid investment.

5. Credit Risk

Investors in the MTNs carry a credit risk relating to the Issuer. The investor’s ability to receive payment under the MTNs is dependent on the Issuer’s ability to meet its obligations, which in turn is largely dependent upon the performance of the Issuer’s operations and its financial position.

6. Valuation

The value of the MTNs depends on several factors, one of the most significant over time being the level of market interest rates. Investments in the MTNs involve a risk that the implied market value of the MTNs may be adversely affected by changes in interest rates. In addition, inflation may reduce the real value of the MTNs returns over time.

The market price of the MTNs could be subject to significant fluctuations in response to actual or anticipated variations in the Issuer’s operating results and those of its competitors, adverse business developments, changes to the regulatory environment in which the Issuer operates, changes in financial estimates by securities analysts and the actual or expected sale of a large number of MTNs, as well as other factors.

7. Diversification

If you choose to invest in businesses of the type displayed on LGB Deal Hub, such investments should only be made as part of a well-diversified portfolio. This means that you should invest only a relatively small portion of your investable capital in such businesses, and the majority of your investable capital should be invested in safer, more liquid assets. It also means that you should spread your investment between multiple businesses rather than investing a larger amount in just a few.