Hotel Chocolat, the upmarket confectioner, wants to raise £5m to fund its expansion by selling “chocolate bonds” to its most loyal customers.

The sweet investment opportunity will be marketed to members of Hotel Chocolat’s Tasting Club, who pay for regular home deliveries of its premium chocolates. The scheme has been approved by the Financial Services Authority, the City watchdog.

The company, which has a factory in Huntingdon, Cambridgeshire, has appointed BDO, the accountant, to advise on the issue of the bonds, which will pay interest in chocolate.

Chocoholics can subscribe for a three-year, £2,000 bond, which will deliver a “tasting box” of chocolate worth about £18 every two months — equivalent to a 6.7% yield. There is also a three-year, £4,000 bond that will provide a chocolate box every month, a 7.29% yield.

The move is similar to the initiative undertaken by The Kings of Shaves Company last year, which issued "shaving bonds" to potential investors to expand the business. At which time financial analysts warned that the unlisted, unregulated and illiquid nature of the shaving bonds made them more of a "gamble than a savings opportunity".

The company's co-founder Angus Thirlwell told The Times "we would rather pay interest to our customers than a bank". The company is on track to deliver a 20% rise in turnover to more than £50m this year.

The money raised will help to expand the high street chain from 42 to 72 shops, enlarge the Huntingdon factory, develop a new cocoa plantation in St Lucia and expand the business overseas. (sourced from thetimesonline)

Are bond saving schemes a successful way to fund expansion?

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