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Good evening all.
Has anyone had contact with, invested with or know of the Coyne Group based in Bristol?
Any information to enhance DD gratefully received.
The company number is 04246869 and it was incorporated in 2001.Financial snapshot from DueDil:The Company Founder Michael Coyne has 11 active Directorships, mostly property related, although one company has a proposal to strike off.I had a look at their website and there is no mention of them being members of an independent redress scheme.The below leads me to believe that they are offering a collective investment scheme, which needs to be FCA regulated:They are exhibiting at the Property Investor Show, which would be a good opportunity to find out more.My questions would be to ask for their Ombudsman number and why they are not FCA regulated when they are taking investors' monies, pooling them, and then offering a profit share. That falls under PS 13/3 and is a regulated activity imho.
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Thanks for the info. I did wonder about collective investment compliance. Am wondering if anyone has used them? I am pretty skeptical given what I have learnt so far and the above info.
Some further information:I searched the FCA register for Coyne Group and Michael Peter Coyne and neither are registered.
I am not an FCA approved person or a lawyer specializing in financial promotions. I am a real estate investor who takes the time to read the details from the FCA and other similar things.
The topic is a bit complex and there are some subtle differences. In the case of the Coyne group, they state the following on their website.
"Your investment funds are not transferred to the Coyne Group. The Coyne Group expertly selects and administers each property investment, taking a share of the profits for it services. But your money is held independently."
Does this make the Coyne group a financial advisor? They are directing where the investors funds are invested while not directly touching the funds. They are being paid a 'share of profits' for the service. The service is to select and administer each investment. Are they acting as an Financial Advisor or have a fiduciary responsibility for to the investors? "When you make a Prime tier investment in a property project administered by us, your funds are loaned to a limited company, owned by Premier tier investors, that purchases the property. Those funds are received and invested by an independent accountant appointed by that limited company. In return you receive a loan note, a charge over the assets, and a share of the profits on completion of the development."
Coyne administers the property project. Are they responsible for delivery of the project on time and on budget?
The funds are a loan from the investor to a company. Sounds like an SPV.
The SPV, if that is the correct term here, purchases the project.
There is an accountant appointed by the SPV. The accountant receives the funds. Not sure what it means when they accountant 'invests' the funds given the funds are meant to be loaned to the SPV. It sounds a bit circular.
The investor receives a loan note to evidence the loan to the SPV and the loan is secured by a charge. No idea what priority the loan charge will have? !st charge or something more junior? Is there 1 charge or many charges if there are many investors?
Then there is a the 'share of profit'. How will that work? Why would a lender get a share of profit? Does the investor hold shares in the SPV? If the investors do not, who owns and controls the SPV? "When you make a Premium tier investment, you are assigned a shareholding in the limited company that makes the purchase. Your funds are held by the independent accountant appointed by that limited company. You and other Premier tier investors appoint a managing director from among your number, and you retain voting rights on the development's progress."
Some answers to the above questions I raised.
It looks like each investor will have 1 or more shares in the SPV.
The shareholders are able to appoint an MD for the SPV. Does that mean the MD is going to run the project? Do the shareholders know whom to hire to get the job done? Are all shares entitled to 1 vote? What about the different tiers?
In another deal that has nothing to do with the Coyne group, some minority shareholders made the point that they do not want the majority to decide. They want to back someone who is competent and is fit for purpose. If the majority can trigger a vote which changes who is in charge, that could be a bad idea if the new leadership is less competent. So, what are the voting rights? Similar to BRexit, some of the time the voters are not able to assess the impact of a decision given the facts are not clear to the voters.
So, coming back to the offer, they are selling shares in an SPV. The money is packaged as a loan. The accountant receives the funds and then arranges the loans to the SPV. The shareholders can vote their shares so I would expect the can switch the accountant and make other decisions which become a change of control. Best that people look carefully if they are buying shares in an SPV.
Is selling shares in an SPV something the FCA regulates for investors in the UK? Generally, yes. The FCA regulates financial promotions. There are a few corner cases where the FCA's regulation will allow a promotion to the public which is legal without the promotion being registered. Subtle differences which most people do not understand. It is possible to study the details and get to the to bottom of the regulations. Most people would not want to spend the time and money so we tend to draw bolder lines. Like a minefield. Unless you are really good at dealing with mines and understanding the issues, best to just give it a wide berth. "35% of profits made are paid to the Coyne Group for its services, and 65% are paid to investors based on the size of their shareholding."
So, 35% success fee paid for the Coyne Group providing services. Not exactly sure what service are being provided other than raising funds and picking where the funds are invested.
Having the power to direct an investor's cash to specific investments sounds like providing financial advice or discretion over an investor's cash. It sounds like. Something an investor will want to research. The FCA regulates financial advisory firms.
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We can dive deep into what might be legal or what is not. To 'thread the minefield' so to speak.
There is an alternative. Rather than walk through the minefield and split hairs, why not stick to a process which is obviously FCA approved?
If you want to be a passive investor (armchair investing) who is leveraging the skills, experience and competence of a UK real estate investor (developer, etc), why not keep is squeaky clean? I suggest you look a equity crowd funding sites where you can be a co-investor in a specific deal using an FCA approved process to raise the funding. Yes, equity. Not P2P/debt sites where you are a lender.
My personal views below ...
The FCA has recognized that social media, including PT, exists. They have created PS 14/4 (funding raising on the Internet) to clarify how people can use social media to raise funds. The broad definition for PS 14/4 is 'crowd funding to earn a financial return'. If the FCA can get all of the collective schemes taking place online to go through an approved platform, it is much easier for the FCA to monitor what is going on. If the regulations need to be changed or adjusted, the FCA has a limited number of sites and FCA approved people to push through any changes. A small number of gatekeepers to have a word with.
Another benefit for us is tied to the 'network effect'. The more people focus on a small number of sites, the more likely there will be lots of investors able to review and invest in a steady supply of deals. Good for the FCA's agenda, for the investors and for the people needing to raise funding. Stock exchanged were invented exactly for this set of benefits. FCA approved crowd funding sites are light touch stock markets where projects can be launched. Similar to an IPO on the LSE or the AIM exchanges. The FCA regulates all exchanges which are based in the UK or focused on UK investors.
The more we nudge people to fund their deals or invest their cash using an FCA website, the better the DD will be. The more the spotlight will be shining so the cockroaches are not able to scam people.
I would like PT to help drive the DD while encouraging people to use FCA approved sites. Fight for transparency and DD in public. Support the FCA regulations rather than remaining on the fence. Shift the tone towards 'public' offers through an FCA process rather than private deals done when no one is watching.
Hi John,When I met you at the show, you said you would go and talk to the Coyne Group.Could you up-date this thread with your conclusion?
Edit note: I removed my comment, as it was in reply to someone who subsequently deleted their comment.
Hi. Has Marks Post been removed?
Hi Stephen,The post by Mark has not been removed by the moderator - therefore it can only have been removed by Mark himself.
general operations director, site owner and moderator - propertytribes.com
The market for 'Developers' looking to grow their business by bringing in Investors is indeed a crowded place and Coyne are nothing unusual there. The FCA focus on this thread is a little bit misleading and not the crux of it. Some 'Developers' are now focusing their business on actually raising finance/platforms as the actually Development stuff is bloody hard !
What you will find with most of these businesses, is the forecast/marketed 12 month project becomes 20 months etc. Often the Developers are stretched finance/resource wise and rather than turn down a good deal, they bring in more investors and continue growing and take on new projects when projects that started 18 months ago are still not exited, i.e. they need new fresh funds.
Often there is nothing dodgy about these people, rather the projects are more difficult than they make out and once your in your sort of stuck until you can exit.
I'm in a few JV's with different developers as well as doing my own developments, without out fail every JV (5 projects) is behind target. However the 2 projects I am doing solo have been much quicker, albeit these don't need planning.
Getting back to Coyne, I think someone investing now will be in a better position than someone 18 months ago as they would have had that time to iron out some of their mistakes they would have made as a business. I went to a few presentations and decided not to opt in. They had something like 17 projects on the go - which suggests they were not closing these out as quick as possible. Also they had different investor relations manager every few months - again that doesn't inspire confidence.
My view is they are honest people, but as with most developers/people seeking funding it won't be like it says on the tin. So if they say 40% return over 12 months - then you should be thinking 30% return over 18 months, i.e. 20% annualised return. That's the decision you have to make, security is generally fine if you are a shareholder in the SPV that owns the project etc.