The London-based business wants to raise £3million to develop existing and new anti-crime products for clients around the world.
Launched in 1996 by brothers Phil Cleary, an ex-police officer, and Mike Cleary, a chemical scientist, it owns the patent to marking agent 'SmartWater' which is only visible under ultraviolet light. The minimum investment is £2,000 and the offer closes on December 16.
Bond offer: SmartWater wants to raise £3million to develop existing and new anti-crime products for clients around the world
SmartWater joins a rush of companies borrowing from ordinary investors - the varied group has included student housing firm Unite, haulage business Stobart Group, doctor's surgery landlord PHP and solar panel company A Shade Greener, among many others.
Leeds-based loans firm International Personal Finance, which operates in Eastern Europe and Mexico, is currently promoting a seven-year retail bond with a 6.125 per cent return and a minimum investment of £2,000. The offer is due to close on November 15.
Retail bonds allow firms to rustle up extra funding and lessen their reliance on bank lending. They have attracted a high take-up because the interest rates are better than people can get on savings products, although investors' money is at risk.
Savers have to tread with care, because if you buy company debt via these bonds the money you make back depends on the firm involved not going bust. You are not protected by the UK's Financial Services Compensation Scheme that guards against losses up to £85,000 if the worst happens and the savings provider goes out of business.
Loans business: International Personal Finance,
which operates in Eastern Europe and Mexico, is currently promoting a
seven-year retail bond
Some retail corporate bonds are listed on the London Stock Exchange, which allows you to trade the bonds before the maturity date. This means you can make money early if you sell when they trade higher than the offer price, but you can also lose if the price is lower.
The International Personal Finance bonds are set to become tradeable in this way, but not the SmartWater bond.
The varying interest rates on retail bonds reflect the amount of risk attached to them - generally speaking, the higher the rate on offer, the higher the risk.
There are fears that people may be putting too many eggs in one basket, as their investment is dependent solely on one company's solvency.
Buying a corporate bond fund which spreads the risk might be a more suitable option for some investors - but the disadvantages are that you have to stump up fees to the manager, and because there is no fixed redemption date the returns rely on how well the fund performs.
Potential tax liabilities are another consideration when buying retail bonds, and investors who are inexperienced in this area should seek independent advice.
If a company is stock market-listed, it is also worth checking the dividend yield on the shares to see how it compares with the return on the retail bond before you decide whether to buy.
For instance, International Personal Finance shares yield 1.41 per cent compared with its retail bond yield of 6.125 per cent.
How do 'retail bonds' work?
The
minimum amount starts at a very low level - sometimes as little as £100
but more usually from £1,000 - and companies use the money raised to
grow or to fund their activities, or reduce their reliance on bank borrowing.
The London Stock Exchange runs a retail bond market which allows you to buy and sell some bonds before the maturity date.
You can make some money on them early if they are trading higher than the initial offer price - but you might lose money if you sell when they are trading lower.
These 'retail bonds' are specifically targeted at small investors and are separate from the far larger corporate bond market dominated by institutions.
Other more niche bonds have been issued by so-called 'passion brands', like boutique hotel firm Mr and Mrs Smith and healthy fast-food chain Leon Restaurants.
These are not tradeable on the stock exchange but can offer higher returns, especially if you are prepared to accept them in the form of vouchers instead of interest. One earlier issuer, Hotel Chocolat, even pays out in boxes of chocolate.
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