Matchless seeks investors

Fancy owning a stake in a revived British motorcycle manufacturer?

Matchless is currently attempting to raise £5m to start production of its new bikes through the issue of 'mini bonds' the firm claims will offer a guaranteed six per cent return. Sound too good to be true? Here's the deal.

In 2012 the Malenotti family (who own Belstaff), bought the rights to the Matchless name and established the Matchless London clothing brand, which has proved fairly successful and has received over £15m of investment. In 2014 the Matchless Model X concept bike was revealed in Milan, created by Franco Malenotti and a Matchless design team. In 2015 the clothing and two-wheeled activities of Matchless were split and the Original Matchless Motorcycle Company (OMMC) Ltd was set up. If you invest in the bike, the clothing is purely there to raise brand awareness, which is important to know.

To date, Matchless has already invested £1.4m in the company and the result is two prototype models - the Matrix X Reloaded and the TT. But the firm needs a further £5m to start production and that's where the mini bonds come in. Matchless has hired a firm called Karadoo to effectively crowd fund the rebirth of the motorcycle business. Matchless is issuing Matchless Mini Bonds with a minimum value of £10,000 to potential investors with a guaranteed annual return of six per cent. And a few sweeteners that include lunch at Goodwood. So what's the catch?

Each Matchless Mini Bond has a fixed initial term of five years, after which Matchless will repay the money. Your only security is the company's principal asset, which is a 30-year licence agreement on its name. So if the company fails, or simply doesn't gather enough money, you are left with a 30-year stake in the name of another failed British motorcycle manufacturer revival. But will it fail?

At the moment, Matchless claims to have a lot of interest in its new models, albeit with fewer than 10 firm orders on its books. The firm is aiming to start production of the new bikes in 2017, which will be built by Onyx Race Engineering in Littlehampton, and is aiming on making 177 bikes in the first year, raising to 250 by 2020.

The basic price of the X reloaded will be £80,000 and the TT £40,000, although they can be up specified at extra cost. So if it gets all its £5m investment, Matchless will need to pay out every year to Mini Bond holders, as well as build all the bikes. That's quite a hard ask, especially considering the price point. To put this into context Ariel, which builds the Ace for £23-£28,000, sells 35 bikes a year. Norton, on the other hand, makes around 500 a year of its circa £15,000 Commando range. The recently reborn Brough Superior SS100 will start production this year at a cost of £45,700.

According to Karadoo, there are a large number of investors interested in a Matchless Mini Bond and it is confident of finding enough investors to cover the money required. If you still fancy a punt all the information can be viewed at Karadoo before the predicted closing date of July this year.

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Marc H

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