Investec targets high-end investors

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With a new series of structured products linked to major stock indexes.

INVESTEC is targeting UK high-net-worth investors for the first time with a new series of structured products linked to major stock indexes.

The South African investment and private banking group is issuing three products this week, according to Gary Dale, head of intermediary sales at Investec in London. One is a tradeable security and the other two take the form of so-called structured plans, deals usually sold to retail buyers with more marketing information provided about the transactions.

Investec has so far focused on the mass retail market with its structured products business, Dale said. The two "plan" deals are similar to products Investec has traditionally done, though they require a minimum investment level of £25 000 compared with the normal level of £1 500. The tradeable securities are for wealth managers to buy and sell on behalf of clients.

"We have not had much of a market in the high end, most of which has been going to large investment banks," Dale said.

Investec's Portable Beta Plan provides investors with returns tied to the MSCI Emerging Markets Index and FTSE 100 index of UK stocks. The five-year structure pays 100% of any rise in the emerging-market index. Investors won't incur a loss if emerging markets decline, but may lose money if the FTSE 100 drops more than 50% between the notes' issue and maturity date. The securities will be offered July 28.

The bank is likely to offer additional products which link potential gains to one asset and losses to another, Dale said.

"We offered a similar product which had BP as the upside and the FTSE as the downside a few months ago, though it didn't see that much take-up at the time," he said.

The bank's Geared Return Plan is also linked to the FTSE 100. Investors get a 33% coupon if the index is above the deal's issuance level after three years. The return is cut to 16,5% if the UK index falls as much as 50%.

Investors incur a loss equal to the decline of the index if it slumps more than 50%.

Investec is also selling an "autocallable" security, Dale said, which is redeemed, or called, early if the underlying asset is at or above specific levels on certain dates.

The bank's three-year notes pay a 12,5% coupon and are automatically called if the FTSE 100 is above the issuance level at the end of the first year, Dale said. If the notes aren't called, the coupon steps up to 25% in year two, and to 37,5% in the third year. If the index isn't above its initial level at any of the three anniversary dates, investors get back their initial investment and no coupon.