The Government has taken an equity stake in real estate investment platform, Shojin, through the conversion of a pandemic-era loan facilitated by the Future Fund scheme.

Launched by the British Business Bank in 2020 to support emerging businesses during COVID, the Government-backed Future Fund matched new private investors on a pound-for-pound basis up to £5m.

According to the fund agreement, if a business raised more than the initial funding through subsequent financing, the debt and interest automatically converted to equity.

In December 2020, the British Business Bank via the Future Fund invested £860,000 into Shojin which was matched by individual investors as part of a £1.72m funding round. In return, Shojin issued a convertible loan note to investors, including the Future Fund, with interest accruing at 8% per annum.

As Shojin has secured additional capital, the Future Fund converted its initial investment into equity, allowing investors to convert to shares at a 20% discount to the lowest subsequent sales price.

The fund also converted interest due from its investment at a 10% discount to the prevailing share price at the time of conversion – resulting in the Government taking a 5.16% equity stake in Shojin this past month.

Chief financial officer at Shojin, Noil Porter, said the investment platform has grown “significantly” in the past few years, with the share price increasing from £500 to £1,029 per share.

“We forecast a five times to eight times growth in the next few years, so this has been, and will continue to be, a very good investment for the Future Fund,” Porter added. “Its investment will grow along with other shareholders.

“The funding has helped significantly because it came as debt and allowed us to navigate through the challenges of the pandemic. The Government has benefitted from a 57% increase in its share value over 36 months.”

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