All private securities listed through online investment platforms and Exempt Market Dealers (EMDs) like SVX are likely to carry more risk than those available on the public markets. Our goal is to make you aware of those risks before making an investment. For further details on the risks in the private markets, refer to the SVX Risks section. Some of the offering specific risks are identified below:
The RAFT SIB is an illiquid investment, with investors receiving investment payout at the end of the final year of the SIB (year 7).
Investment return for investors is solely dependent on the performance of the funded RAFT project. Failure to achieve the baseline performance rates in multiple years will result in a loss of capital. Performances between baseline and anticipated outcome rates will result in IRR lower than the anticipated 3.44%. As opposed to an all or none model, maximum returns is only achieved if 100% of total cohort performs to the beneficial outcome. In a scenario where baseline targets aren’t met, investors may be asked to commit further funds to the investment. Failure to meet baseline performance in all 7 years of the SIB will result in complete loss of funds. Mitigation: Investors hold the option to opt out early of the investment by year 4, if the RAFT project has underperformed beneath the baseline performance rates set out in each of the previous three years. The baseline and anticipated outcome target rates are set conservatively relative to industry research and RAFT’s performances historically.
The success of the RAFT project may rely on the existing regulations, specifically in the education and housing sector. Drastic changes in policy in these sectors could materially impact the RAFT project performance, thus affecting the investor return.
This investment is at risk if RAFT is unable to continue organizationally for any reason.
The return on investment could be diminished due to severe inflation within the proposed 7 year investment term. Securities cash flow may decline in value over time, with the severity dependent on total amount invested per investor.
Changes in government policy on homelessness intervention may affect investor returns if they were to change in the duration of the investment term.
It is worth noting that a key risk mitigant is that the Ontario Government (via the OTF and the Ministry of Economic Development and Growth) have approved and signed the RAFT SIB Outcomes Agreement between the OTF and RAFT SPV entity in May 2018. This Outcomes Agreement outlines some of the key rights, obligations, and parameters of the RAFT SIB (between OTF and the RAFT SPV), and will be complemented by the pending Investor Agreement (to be negotiated between the RAFT SPV and investors).