Investing in organisations via the Secondary Market

Many of you will be familiar with our primary investment offers but did you know that Ethex also runs a secondary market? This secondary market provides you with another opportunity to become an investor (much as if you were investing on a mainstream stock exchange) in a number of fantastic businesses like Thrive Renewables, Ethical Property Company PLC and Golden Lane Housing. So how does it work?

"We've been committed to supporting sustainable initiatives for a number of years. We like the com-munity of people coming together to be part of renewables, we like that sense of community.
The returns are actually good – you get an investment return, community return and the benefit to climate change return - ultimately it’s all about a future return.”
Mr Andrew Davies – Thrive investor

Why active secondary markets are important?
An active secondary market is important as it provides investors with confidence about the liquidity of their investment. Ethex is working hard to improve the liquidity in the secondary market by providing clear information about price, products and overall performance of each organisation.

In addition, by ensuring that share capital and bond finance is transferable the businesses don’t have to make a provision in their accounts for liquidity (which is something that has to be done with withdrawable shares). Instead, when an investor wants to realise the value of their holding, a mechanism is provided so that bonds and shares can be traded from one investor to another rather than via the business.

“We believe in a clean, smart energy system that is powered by the investment of many. Thrive’s sec-ondary share market is important to the company and its shareholders in realising this vision. It pro-vides liquidity which, in simple terms, means that existing shareholders can sell (or exit) their shares if they need to through a secondary market. Shareholders and Institutions investing in Thrive need the reassurance to know they can buy and sell our shares. In addition to shares, Thrive’s secondary market for its Buchan Bond gives investors the chance to buy and sell bond certificates throughout the year. Whilst the secondary markets provide liquidity for existing investors, it also offers all year round in-vestment opportunity to new investors, outside of Thrive’s share issues, which happen roughly every 18 months.” Matthew Clayton MD Thrive Renewables

Photo courtesy of Thrive Renewables PLC

Price variability
As with mainstream stock exchanges, Investors should be aware that the price of transferable shares and bonds can vary and investors may gain or lose on their investment. At any one time, there might be a lot of people looking to buy and not so many sellers, in which case the price can increase and vice-versa if there are a lot of people looking to sell. The price of shares and bonds on the secondary market can be determined by supply and demand, as well as by the underlying fundamentals of the business or product.

How to buy and sell transferable shares and bonds
Buying and selling on the secondary market can at first glance appear a little more complicated for the following reasons, however Ethex has a dedicated team to ensure the process is straightforward.

  1. You can only buy or sell your transferable shares or bonds if there is someone else who wants to buy some from you, or sell some to you.
  2. The price that you buy or sell at has to be agreed with the other party.
  3. To place an order, you need to decide how many shares or bonds you want to buy or sell and the price at which you are willing to buy or sell at.

Ethex has a dedicated team who will keep you informed at every stage to let you know how your order is progressing. We will also provide you with information on past trades and current offers to help you make a decision on the price that you might wish to buy or sell at.

Organisations using the Ethex secondary market
Ethex runs the secondary market for a number of organisations. See our full list of secondary investment opportunities on Ethex’s ‘Positive Savings and Investments’ page.

Photo courtesy of Golden Lane Housing

Do your research!
Before making a decision to buy it is important to take a look at the financial, social and environmental performance and risks of the company you are interested in. Ethex makes conducting your due diligence as straightforward as possible by providing information on the product and the organisation to provide you with a comprehensive picture of what you’re potentially buying into.

For all our secondary market products, you can also click on the ‘latest prices’ tab for information on price and availability. Here you’ll find all the latest information on the trades that have been completed, offers that are open to sell and prices buyers are prepared to pay. Furthermore, at the end of the page you will find a graph showing past prices and trade volume.

Finalising the transaction
To buy: When you have looked at all the details you need to, simply click the orange “buy online” button for the product you’re interested in and our website will guide you through the process.

To sell: Under the “latest prices tab” for each product, there is a link to a “simple online” form that you need to fill in to sell your shares. We will ask for details from your certificate, which you will need to send us once we match you with a buyer. So please ensure you have the certificate to hand!

Once you have placed an order, Ethex will try to match it with another party. Once a match has been made, Ethex will contact you direct to complete the transaction.

It may not be possible to broker a transaction at all times because an investment may not be available to buy or sell at that time: it all depends on the market and whether we are able to match those selling with those who want to buy. If you want to know more, there is a handy ‘buying and selling guide’ in the Help and Guidance section of the Ethex website.

Dividends and interest
Owning transferable shares or bonds in a company can pay you dividends or interest. As with all other investments, the returns you receive are not guaranteed and depend on the performance of the business. Each business will have a policy on returns which are quoted on the profile for that business on the Ethex website.

If you need help
If you need any further help with regards to the Ethex secondary market then please call a member of the Ethex team, who will be happy to help on 01865 403 304 or email help@ethex.org.uk

https://www.ethex.org.uk/savings--investments_16.html

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