Global-e bonds - What are they?
Is it a bond fund? Is it an equity investment? Is it a lottery? These are the questions advisers and investors throughout New Zealand will be asking when they learn about the newest investment in the market.
Tuesday, March 7th 2000, 12:00AM
Is it a bond fund? Is it an equity investment? Is it a lottery? These are the questions advisers and investors throughout New Zealand will be asking when they learn about the newest investment in the market.
Global-e Investments kicks off a high profile, multi-million dollar marketing campaign today for its Global-e Bonds.
A simple and accurate description of Global-e Bonds is that it is a bond fund with lots of bells and whistles.
At the most basic level people can buy one of these bonds at US$1062 each will be guaranteed that they will get US$1200 back in 20 years time.
That's a flat return of one per cent a year.
As a tickler, or a promotion, each bondholder will automatically be in the running to win big cash prizes through regular prize draws. Prizes range in value from US$10,000 through to US$10 million.
In total the company is planning to give away up to US$39.6 million a year (assuming the maximum number of bonds available is issued in the first tranche).
So far Global e-Bonds looks like an enhanced version of the popular Bonus Bonds scheme.
At the next level up though bondholders are given the option of being shareholders in a dot com company.
Each bondholder will be offered an option to acquire 300 shares, for US$15, in the issuing company Global e-Investments. This option will be exercisable during a three month period next year.
Global-e's Internet strategy involves establishing a website that will be used to sell products and services to bondholders.
The prize draw strategy comes in here as a way of generating traffic into the site. The promoters of the scheme plan to do a live draw online each day at 6am in the morning as a way to generate traffic.
It believes the prizedraws will be able to generate high volumes of traffic, which also provides the opportunity for substantial advertising revenue.
Global-e's New Zealand chief executive Philip Markwick says the company needs to sell 25,000 bonds to get the programme off the ground and it can issue up to 1 million bonds in the first tranche.
Based on these figures the site could expect between 250,000 and 750,000 people each day. (This would make it one of the busiest websites in the world).
Markwick believes Global-e has the potential to raise US$250 million in the first 12 months. He says it will be promoted through financial planners, who will be paid a commission of US$25 for each bond sold.
For more information see Special Report.
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