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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.30 17:35:00 -
[1]
Premium Bonds
Concept A Premium Bond is a lottery bond issued by the United Kingdom government's National Savings and Investments scheme. The government promises to buy back the bond, on request, for its original price. They were introduced in 1956. Over one third of the UK population own premium bonds.
The government pays interest on the bond (currently 1.5%), but instead of the interest being paid into individual accounts, it is paid into a prize fund from which a monthly lottery distributes prizes, or premiums, to those bond-holders whose numbers are selected randomly.
Investors can purchase bonds at any time; after 30 days, their bonds are eligible for the draw: their numbers are entered each month, with an equal chance of winning any prize, until the bond is cashed in.
And that's what I would like to do here, with modifications to suit our environment.
Premium Bonds Offering Premium Bonds corporation (PBOND) will offer 10 billion in premium bonds. Each bond will cost 25 million ISK. The maximum holding per person will be 500 million ISK. The bond will launch when the full 10 billion is paid up. Preference will be given to the smallest investors.
Prize Fund At the end of each month, Chribba Dice will be used to determine the winners for that month. Prizes will be: 50 million ISK û 1 winner 5 million ISK û 3 winners 1 million ISK û 85 winners
In the first month, there will be a bonus premium bond prize of a Primae. Seemed apt somehow. :)
Prizes will be paid out by my alt in PBOND, Premiatita. The top 4 prizes will be paid out immediately after month end, and the remaining prizes will be paid out within one week.
I've tried to structure this in a similar fashion to UK premium bonds, but there are differences. The fund is more heavily skewed to the largest prize, and, according to my calculations, the odds of winning a prize are better. Some tweaking may have to be done, especially if the fund expands.
So best case scenario is that you buy a bond for 25m and receive 50m each and every month. I'm sure someone will be able to tell me the odds of that happening. :)
Application of Funds Bonds will be used to expand One Stop's BPO library. The CEO of PBOND will be an alt of Grendell's. Only he will have access to the master wallet, which is where bond payments will go. Grendell will purchase the BPOs I request and lock them down in One Stop.
What that means is that I don't have access to the cash at any time, and the premium bonds are fully collateralised.
Audit The corporation will be audited by Magnu Stormhawk and accounts will be published every quarter.
Buybacks Bonds will be repurchased at face value on demand. It may take a week to process buybacks. It should be possible for bond holders to resell their bonds, but I haven't worked out a mechanism for that or discussed it with Grendell.
Gifts People may buy premium bonds as gifts for friends. The payment should include the word ôGiftö in the description, and an Eve mail must be sent to Premiatita specifying the name(s) of the beneficiaries.
So, over to you guys for feedback...
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Sebastian Draconis
Draconis Holdings
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Posted - 2010.07.30 17:56:00 -
[2]
Originally by: Varo Jan
Investors can purchase bonds at any time; after 30 days, their bonds are eligible for the draw
Just to be clear, in the above you're talking about what they do in the UK right?
Your bond is capped at 10bil initially and I assume additional people won't just be allowed to buy in and water down the odds. Correct?
Your signature exceeds the maximum allowed filesize of 24000 bytes -Rauth Kivaro ([email protected])
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cosmoray
Bella Vista Holdings Corp
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Posted - 2010.07.30 18:13:00 -
[3]
Edited by: cosmoray on 30/07/2010 18:15:19 Why do you need more financing?
No matter what way you look at this, it is just another means of raising capital (just like the UK Government). You are also offering a 1.5% return per month.
That is the lowest return of all IPO's/bonds offered in MD. Lower than BB and BMBE. IMO I think your accounts can't be in that great of a position. Constant refinancing, requiring extra capital. Your books didn't look that good, you were barely profitable. Any slight change in operating circumstance and you will lose money.
Personally I think your more of a credit risk now.
Lets be clear about something, there is no way in hell you would have been able to buy OSMS without full collateral lockdown.
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.30 18:26:00 -
[4]
Originally by: Sebastian Draconis Just to be clear, in the above you're talking about what they do in the UK right?
Your bond is capped at 10bil initially and I assume additional people won't just be allowed to buy in and water down the odds. Correct?
That's correct on all counts. I actually believe this would work better with larger numbers, but 10B is a realistic number to start with. Should there be an expansion, any changes to the odds or the spread of prizes would require full discussion in advance.
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Estel Arador
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Posted - 2010.07.30 18:26:00 -
[5]
Originally by: cosmoray That is the lowest return of all IPO's/bonds offered in MD.
Let's not forget the 0% bond (via Dutch auction) some time ago. There's way too much isk and way too few decent (or even half-decent) offerings.
Free jumpclone service|1092 stations! |
Ray McCormack
Nordar Innovations.
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Posted - 2010.07.30 18:33:00 -
[6]
Originally by: cosmoray your
you're
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Lucyna
Minmatar
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Posted - 2010.07.30 18:41:00 -
[7]
# Bonds offered = 400
EV of interest on one bond, per month: (1/400)*50M+(3/400)*5M+(85/400)*1M=375,000
Expected Monthly Return = 1.5%
For anyone who's curious... He didn't specify what this bond's interest rate would be, but it does line up with the 1.5% he mentioned.
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.30 18:49:00 -
[8]
Originally by: cosmoray Why do you need more financing?
Because I have identified profitable expansion opportunities.
Quote: No matter what way you look at this, it is just another means of raising capital (just like the UK Government).
Of course it is. What's your point?
Quote: You are also offering a 1.5% return per month.
That is the lowest return of all IPO's/bonds offered in MD. Lower than BB and BMBE.
Please read what I said again. This is a hybrid. It is part bond and part lottery. I am not offering a fixed return of anything to all investors, so a comparison with IPOs/Bonds is not valid. All investors have an equal opportunity to win prizes.
Quote: IMO I think your accounts can't be in that great of a position. Constant refinancing, requiring extra capital. Your books didn't look that good, you were barely profitable. Any slight change in operating circumstance and you will lose money.
Personally I think your more of a credit risk now.
Well, you're entitled to your own opinion. However, with respect, you didn't understand the set of accounts that were presented for OS. Nor do you know what my other activities are, nor my net worth - so you are not in a position to make a qualified judgement.
Quote: Lets be clear about something, there is no way in hell you would have been able to buy OSMS without full collateral lockdown.
Another inaccurate statement. OS was purchased with 125B collateralised by BPOs, 25B backed by personal guarantees by Ji, and 25B not collateralised at all.
That was the past, so I don't understand the relevance here. Besides, these premium bonds would be fully collateralised.
And while we're talking about clarity, you should be clear about something. I could raise 10B at 3% from a number of sources immediately. I choose to do this because it has cost advantages to me and because it's a novel approach that hasn't been tried before in MD. And that appeals in itself.
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CCP Adida
C C P C C P Alliance
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Posted - 2010.07.30 19:00:00 -
[9]
Moved from market discussion.
Adida Community Rep CCP Hf, EVE Online
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.30 19:01:00 -
[10]
Originally by: Lucyna # Bonds offered = 400
EV of interest on one bond, per month: (1/400)*50M+(3/400)*5M+(85/400)*1M=375,000
Expected Monthly Return = 1.5%
For anyone who's curious... He didn't specify what this bond's interest rate would be, but it does line up with the 1.5% he mentioned.
No, I didn't specify the interest rate because, from the viewpoint of someone who buys one premium bond the return could be 0 in any one month or he could receive twice his capital at the other end of the scale. That's the lottery side.
From my perspective, I have an obligation to pay 1.5% into the prize fund each month, which will then be distributed as prizes.
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Breaker77
Gallente Reclamation Industries
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Posted - 2010.07.30 19:03:00 -
[11]
Originally by: CCP Adida Moved from market discussion.
Yeah because all the other 10,000 bond offerings are still in the MD forum this needs to be in sell orders
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Ray McCormack
Nordar Innovations.
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Posted - 2010.07.30 19:05:00 -
[12]
Originally by: Varo Jan However, with respect, you didn't understand the set of accounts that were presented for OS.
That doesn't mean his statement about OS being barely profitable is incorrect. And it's partly unclear which entity is securing these bonds (financially, not locking down assets) so either your personal activities nor nett worth have any bearing; or you are obligated to disclose them.
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Ray McCormack
Nordar Innovations.
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Posted - 2010.07.30 19:08:00 -
[13]
Originally by: CCP Adida Moved from market discussion.
Adida, this issue has been cleared with the community team countless times before (most recently with Pete "Navigator"); sale and auction threads of financial items such as shares and bonds have been allowed in MD.
Please move this thread back.
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israus
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Posted - 2010.07.30 19:09:00 -
[14]
Originally by: Breaker77
Yeah because all the other 10,000 bond offerings are still in the MD forum this needs to be in sell orders
give them time breaker all these bond offerings must be causing server lag so the mods can't do anything just give them time for the lag to subside so they can get back to moving random threads all over the place.
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Lucyna
Minmatar
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Posted - 2010.07.30 19:12:00 -
[15]
Originally by: Varo Jan
Originally by: Lucyna # Bonds offered = 400
EV of interest on one bond, per month: (1/400)*50M+(3/400)*5M+(85/400)*1M=375,000
Expected Monthly Return = 1.5%
For anyone who's curious... He didn't specify what this bond's interest rate would be, but it does line up with the 1.5% he mentioned.
No, I didn't specify the interest rate because, from the viewpoint of someone who buys one premium bond the return could be 0 in any one month or he could receive twice his capital at the other end of the scale. That's the lottery side.
From my perspective, I have an obligation to pay 1.5% into the prize fund each month, which will then be distributed as prizes.
http://en.wikipedia.org/wiki/Expected_return
Actual and expected returns are quite different. I mean... I was pretty clear and all I wanted to do was outline moar info for the purchasers of these Premium Bonds, but I guess no good deed goes unpunished...
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Amarr Citizen 155
Nordar Innovations.
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Posted - 2010.07.30 19:25:00 -
[16]
Originally by: Ray McCormack
Originally by: CCP Adida Moved from market discussion.
Adida, this issue has been cleared with the community team countless times before (most recently with Pete "Navigator"); sale and auction threads of financial items such as shares and bonds have been allowed in MD.
Please move this thread back.
Just a guess, but I think this was moved because it looks very similar to lots of lotteries that are in the sell forums. I can't be sure because he didn't specify but when you first read it, it appears more like a lottery than an investment.
-----------------/finger I only post on MD when I'm too drunk too give a ****. |
Dzil
Caldari Caldari Independent Navy Reserve OWN Alliance
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Posted - 2010.07.30 19:54:00 -
[17]
Most investments in EVE look like a lottery :P
Retired from corp sales. Time to spend some of this on pretty explosions :) |
Shar Tegral
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Posted - 2010.07.30 20:30:00 -
[18]
Originally by: Dzil Most investments in EVE look like a lottery :P
This one even says pay out is only by lottery. Looks like a lottery, smells like a lottery, uses the word lottery.
Wealth, howsoever got, in Eve makes Lords of morons and gentlemen of thieves; Aptitude and intellect are needless here; 'Tis impudence and money that grants fame. |
Phoebe Halliwel
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Posted - 2010.07.30 20:45:00 -
[19]
Originally by: cosmoray
IMO I think your accounts can't be in that great of a position. Constant refinancing, requiring extra capital. Your books didn't look that good, you were barely profitable. Any slight change in operating circumstance and you will lose money.
Personally I think your more of a credit risk now.
Lets be clear about something, there is no way in hell you would have been able to buy OSMS without full collateral lockdown.
Varo is more than able to answer for himself, so I'll try stick to points relevant to my experience of OSR. Since Varo originally took over One Stop 1. Interest payments for were made in full on time <- I can confim that as an investor 2. Accounts were prepared in accordance with gaap, audited fully by Magnu (I also reviewed them, as I believe several other people from MD did) 3. The secured/unsecured portion of the business has been transferred from public to private with a respected member of MD, with a more favourable interest rate. 4. As Patri pointed out on his forum post, there are opportunities for OSR to expand further in the research market, Varo is taking steps to address that. 5. The 100b joint OSR expansion is fully collateralised, and I share liability.
So.. this is someone who borrowed 175b on his first offering, successfully ran the business, and has taken steps to reduce interest payments. Following on from that, an expansion was made which is joint/fully collateralised, and the franchise market is being reviewed because potential investors asked for it. If Varo for any reason is unable to make the interest payments on the expansion (which I doubt), I can cover the lot. This offering is fairly small and also fully collateralised, so really not sure why you think Varo is "more of a credit risk now" than 6 months ago? It seems more of a move by a savvy business manager looking to explore new avenues for public investment, whilst at the same time keeping his own exposure and repayment commitments as low as possible.
Bearing in mind you personally have never submitted to an audit, and appear to champion reputation backed businesses, this criticism appears quite hypocritical. From an MD point of view, OSR has been run successfully since the handover, so apart from forum based grudges and pettiness, is there even a valid criticism of his reputation? If you are concerned mainly because of the presure of borrowing significant amounts of isk in relation to personal NAV, and the risk of burnout, you've asked that question previously and been answered. It is a valid concern, but there are market factors that need to be taken into consideration.
The markets OSR operate in are very strong. I can confirm this as Varo's main competitor in one area, with only a handful of others operating at this level, who we also have dealings with. We effectively neutralised each other by entering into a trade agreement, which makes our respective position stronger. One thing to note; my business is totally different to Varo's (and predates the OSR handover by some time) in that I operate with higher turnover, zero fixed assets, and a fraction of the financial investment. Since we only started co-ordinating our activities fairly recently, you haven't seen the results on Varo's financial statements as yet. I'm not sure whether he will continue to publish these, given OSR is now privately funded, although I do hope so as the accounts should be easier to prepare and show a significantly increased position. We've also discussed a merger, but it's fairly low on the to-do list. My NAV does exceed OSR's liability, would that make me a better or worse credit risk, or a better or worse business manager by your rather fluid standards?
If any loans were taken and defaulted on, or promises made and broken, I could understand serious criticism. But credit where it is due.
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Breaker77
Gallente Reclamation Industries
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Posted - 2010.07.30 20:50:00 -
[20]
Originally by: Phoebe Halliwel
The markets OSR operate in are very strong.
I somehow doubt the dread BPC market is very strong considering that having more than 5 ships in the same system causes the node to lag out and crash.
As for his Orca BPC pack sales I know of many others who are selling packs for less than OS.
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Phoebe Halliwel
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Posted - 2010.07.30 21:24:00 -
[21]
Originally by: Breaker77
Originally by: Phoebe Halliwel
The markets OSR operate in are very strong.
I somehow doubt the dread BPC market is very strong considering that having more than 5 ships in the same system causes the node to lag out and crash. As for his Orca BPC pack sales I know of many others who are selling packs for less than OS.
I didn't specify the market. Don't make assumptions
That said, selling for less isn't always a sign of success, and dreads are being bought up and boiled down for supercaps by plenty of people atm as it shortens the logistics chain.
Point taken about the lag though
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Breaker77
Gallente Reclamation Industries
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Posted - 2010.07.30 21:34:00 -
[22]
Originally by: Phoebe Halliwel dreads are being bought up and boiled down for supercaps by plenty of people atm as it shortens the logistics chain.
Why wouldn't you just use Kazuo Ishiguro mineral compression service?
Unless of course you are preying on people that think the minerals they mine are free Which, BTW, are some of my best customers
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Phoebe Halliwel
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Posted - 2010.07.30 22:01:00 -
[23]
Originally by: Breaker77
Originally by: Phoebe Halliwel dreads are being bought up and boiled down for supercaps by plenty of people atm as it shortens the logistics chain.
Why wouldn't you just use Kazuo Ishiguro mineral compression service? Unless of course you are preying on people that think the minerals they mine are free Which, BTW, are some of my best customers
I'm taking this as a genuine question, not a troll, so please treat the reponse as such.
I'm really not an expert, but I know plenty of people gagging to get into supercaps, and they do tend to babble about what they are doing. With mineral prices being so low atm, carrier and dread build cost is pretty low, but supercap prices aren't following so people are looking at self build options. Say you want a Nyx (someone explained this to me the other day, but I was drunk, so bear with me) it's something like 10-15 carriers (?), which you can either build in lowsec, or buy dirt cheap (which seems to be the preferred option) and just jump the ship out to your 0.00 build location, then repro back into built cap construction parts. That's 15 jumps, as opposed to the compression service which (afaik, but as I say, no expert) seems significantly more in terms of freighter/JF runs and time spent at the other end building the cap comps, where you also have to factor in costs for BPCs or BPOs to build from.
Titans are around 30 dreads (again, hazy on this) or 70 JF runs for the compressed materials, so my babblers tell me they are stocking up on caps while they are cheap and they can pile them up in safe locations in lowsec for repro later on, as opposed to the compression service which requires a significant portion of the cost upfront. 1b chunks look more attractive from this point of view, regardless of the overall cost/saving. Only thing is, I'm basing this on the assumption you can repro caps into the construction parts to cut down build time, which I've been told of, but never done personally. I thought until recently caps just reproed back into mins. So all my assumptions on this and how it affects the BPC market might be incorrect if that isn't the case =P
That said, I do monitor kit sales overall and dreads are up 10-20% in price for some races, and appear to be moving faster than normal, although that may be a seasonal thing.
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Breaker77
Gallente Reclamation Industries
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Posted - 2010.07.30 22:07:00 -
[24]
Edited by: Breaker77 on 30/07/2010 22:08:03
Originally by: Phoebe Halliwel
I'm taking this as a genuine question, not a troll, so please treat the reponse as such.
Which is good because I wouldn't troll on this subject.
but supercap prices aren't following
Supercaps can only be built where sov is established. While being no expert on supercap construction, I would guess that most of the cost of building a supercap goes to the alliance that has sov over the space where one is being built.
edit: I do agree it is easier to jump dreads/carriers than it is to move jump freighters full of modules.
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.30 22:20:00 -
[25]
Moderators seem to have missed the point that nothing is being offered for sale here.
The concept of Premium Bonds is under discussion in this thread.
Moderators may also find it useful to know that the UK government classifies Premium Bonds as investments.
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.30 22:27:00 -
[26]
Originally by: Shar Tegral
Originally by: Dzil Most investments in EVE look like a lottery :P
This one even says pay out is only by lottery. Looks like a lottery, smells like a lottery, uses the word lottery.
A lottery is a one-off event. You buy a ticket, it goes into a draw, you win or lose. Your ticket is worthless after the draw. You can't sell your ticket back. End of story.
With premium bonds you buy a bond, you can redeem it at any time at what you paid for it, your bond stands a chance of paying out each and every month you hold it.
Huge difference.
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Formular 1
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Posted - 2010.07.30 22:31:00 -
[27]
OMFG this is "sell orders" if you want discussion take it else where
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Breaker77
Gallente Reclamation Industries
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Posted - 2010.07.30 22:33:00 -
[28]
Originally by: Varo Jan
Originally by: Shar Tegral
Originally by: Dzil Most investments in EVE look like a lottery :P
This one even says pay out is only by lottery. Looks like a lottery, smells like a lottery, uses the word lottery.
A lottery is a one-off event. You buy a ticket, it goes into a draw, you win or lose. Your ticket is worthless after the draw. You can't sell your ticket back. End of story.
With premium bonds you buy a bond, you can redeem it at any time at what you paid for it, your bond stands a chance of paying out each and every month you hold it.
Huge difference.
You worded you offering the wrong way
Quote: Premium Bond is a lottery bond
and then you said this
Quote: your bond stands a chance of paying out
So in otherwords, you might get nothing.
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Phoebe Halliwel
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Posted - 2010.07.30 22:40:00 -
[29]
Edited by: Phoebe Halliwel on 30/07/2010 22:40:34
Originally by: Varo Jan A Premium Bond is a lottery bond issued by the United Kingdom government's National Savings and Investments scheme. The government promises to buy back the bond, on request, for its original price. So, over to you guys for feedback...
It's quite clearly a discussion. In fact if this should be in Sales no discussion is allowed, so keeping it here is quite hilarious. That said we can carry on with the discussion and utterly undermine the purpose of the current forum. ed. spelling
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Estel Arador
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Posted - 2010.07.31 00:23:00 -
[30]
I fully agree with Phoebe, especially that last post.
Premium bonds seem like an interesting way to raise money. It might be more manual work than simply issuing dividends though.
Free jumpclone service|1092 stations! |
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Lecherito
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Posted - 2010.07.31 00:33:00 -
[31]
Originally by: cosmoray Edited by: cosmoray on 30/07/2010 18:15:19 Why do you need more financing?
No matter what way you look at this, it is just another means of raising capital (just like the UK Government). You are also offering a 1.5% return per month.
That is the lowest return of all IPO's/bonds offered in MD. Lower than BB and BMBE. IMO I think your accounts can't be in that great of a position. Constant refinancing, requiring extra capital. Your books didn't look that good, you were barely profitable. Any slight change in operating circumstance and you will lose money.
Personally I think your more of a credit risk now.
Lets be clear about something, there is no way in hell you would have been able to buy OSMS without full collateral lockdown.
Cosmo the troll master?
-L
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.31 00:43:00 -
[32]
Originally by: Estel Arador I fully agree with Phoebe, especially that last post.
Premium bonds seem like an interesting way to raise money. It might be more manual work than simply issuing dividends though.
You're right, Estel. There is definitely more work involved. A plain vanilla bond of 10B would probably have no more than 10 investors, so 10 monthly payments to be made. A premium bond will have 89 monthly payments and other administrative work. Had I followed the UK government model precisely the number of monthly payments would have been far higher.
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Lecherito
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Posted - 2010.07.31 00:51:00 -
[33]
PS: Do the forum moderators even know what the **** they're doing? or do they follow /reports like drones?
-L
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Ji Sama
Caldari Tash-Murkon Prime Industries manufacturing disaster
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Posted - 2010.07.31 05:13:00 -
[34]
Originally by: Lecherito PS: Do the forum moderators even know what the **** they're doing? or do they follow /reports like drones?
-L
DO NOT DISCUSS MODERATION: MODERATORS KNOW WHERE THINGS ARE TO BE PLACED; AND THEY HAVE A KEEN UNDERSTANDING ABOUT WHAT THE MD FORUM IS TO BE USED FOR!
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Hel O'Ween
Men On A Mission
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Posted - 2010.07.31 08:05:00 -
[35]
Reported for being in the wrong forum (Sales, that is). -- EVEWalletAware - an offline wallet manager |
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CCP Navigator
C C P C C P Alliance
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Posted - 2010.07.31 12:15:00 -
[36]
Thread moved back to Market Discussions for discussion of the subject matter. Please note that any Premium Bonds sales would be a sales order thread and not one for MD as it is a lottery.
Navigator Senior Community Representative CCP Hf, EVE Online
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.31 15:01:00 -
[37]
Originally by: Breaker77 As for his Orca BPC pack sales I know of many others who are selling packs for less than OS.
Which means I'm making higher profits on my Orca kit sales than my competitors. And your point was?
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.31 15:07:00 -
[38]
Originally by: Estel Arador I fully agree with Phoebe, especially that last post.
Premium bonds seem like an interesting way to raise money. It might be more manual work than simply issuing dividends though.
I did reply to this post, but for some reason it and others were deleted. Oddness. Here's what I said:
You're right, Estel. There is definitely more work involved. A plain vanilla bond of 10B would probably have no more than 10 investors, so 10 monthly payments to be made. A premium bond will have 89 monthly payments and other administrative work. Had I followed the UK government model precisely the number of monthly payments would have been far higher.
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Tiberizzle
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Posted - 2010.07.31 15:24:00 -
[39]
Originally by: Shar Tegral
Originally by: Dzil Most investments in EVE look like a lottery :P
This one even says pay out is only by lottery. Looks like a lottery, smells like a lottery, uses the word lottery.
I guess we know who petitioned to have it relocated then.
Are you still bitter about your thread being moved?
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.31 15:39:00 -
[40]
Originally by: CCP Navigator Thread moved back to Market Discussions for discussion of the subject matter. Please note that any Premium Bonds sales would be a sales order thread and not one for MD as it is a lottery.
With respect, it is not a lottery, it is a financial instrument used by the British government, and classified as such by investment authorities.
A lottery ticket is worthless after the draw. It's a one-off event. A premium bond can be sold back at any time. A premium bond pays a variable rate of interest determined by chance - and that is the similarity to a lottery.
Premium bonds are well known in the UK because one third of the population owns them. The concept is not widely used outside the UK, which is why they are sometimes referred to by people not familiar with these bonds as lottery bonds. Lotterised would have been a better choice of word. The noun is bond, the adjective is lotterised.
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Brock Nelson
Caldari Flux Technologies Inc SRS.
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Posted - 2010.07.31 15:48:00 -
[41]
Seeing as how you managed to get 100b in secured loan from Grendell, why couldn't you get another 10b?
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.31 16:09:00 -
[42]
Originally by: Brock Nelson Seeing as how you managed to get 100b in secured loan from Grendell, why couldn't you get another 10b?
I could. He offered it and much more. Others have also offered financing.
Premium Bonds are a new (for MD) method of raising finance, and I'm all for innovation. Don't you enjoy trying new things in EVE?
I hope that answers your question.
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cosmoray
Bella Vista Holdings Corp
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Posted - 2010.07.31 20:00:00 -
[43]
Originally by: Varo Jan
Originally by: Brock Nelson Seeing as how you managed to get 100b in secured loan from Grendell, why couldn't you get another 10b?
I could. He offered it and much more. Others have also offered financing.
Premium Bonds are a new (for MD) method of raising finance, and I'm all for innovation. Don't you enjoy trying new things in EVE?
I hope that answers your question.
Premium bonds in the UK are an excellent source of capital for the UK government. If the UK government was to tap international markets a 30 yr bond issued by the UK treasury carries about 3-4% interest rate depending on market conditions. Issuing premium bonds the cost of capital is about 1.5%.
It is all about cheaper financing.
At the end of the day this a form of bond that makes a very small return. My definition of return is the total of all winnings per month divided by bond size. This is Varo's interest rate.
This could be an excellent method of raising capital, but is not attractive at 1.5%. If you were offering collaterilized premium bonds at 3-4% total return (prize pool of 300 - 400M ISK per 10B) then it would be attractive to investors.
As someone has pointed out that I have become erratic and emo-posting in Varo's threads, my concern is:
Initially OSMS had transparent financing (numbers may be slight +/-). 125B collateral backed. 25B guaranteed by ji Sama 25B unsecured
Now the funding is quasi private, so it is not transparent to what assets are collateralized for which bonds. There also seems to be additional financing occuring regularly all of which is backed by you not touching the money.
My concern is that you have a huge amount of financing and if something goes wrong who gets their money back first? Grendell is securing the public financing, but is also backing the private financing. If there was trouble and Varo split who is Grendell obligated to pay out? Does he pay himself the money he is owed, and give the rest to the other bond holders or vice versa.
Then there is the issue of partnerships and who owns what.
You did release some nice accounts trying to be all professional but IMO the whole things seems to be have become very opaque and difficult to understand and so where do the investors go to if it all goes sour.
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Varo Jan
Caravanserai Consulting
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Posted - 2010.07.31 21:06:00 -
[44]
Originally by: cosmoray This could be an excellent method of raising capital, but is not attractive at 1.5%. If you were offering collaterilized premium bonds at 3-4% total return (prize pool of 300 - 400M ISK per 10B) then it would be attractive to investors.
If I were offering a simple bond at 1.5% it would not be attractive. The same goes for the British government. It's the element of chance in premium bonds that has appeal. Best case, you could double your capital in a month. No other IPO or bond offers that possibility. It's clear from the popularity of poker and lotteries that people like to gamble in Eve. It's also clear that there is a significant pool of ISK looking for a home.
Bear in mind also that my running costs are higher with a premium bond than they would be with a plain vanilla bond, and time is money.
Quote: My concern is that you have a huge amount of financing and if something goes wrong who gets their money back first?
The same could be asked of you and others. None of your current ventures are audited. None of your current ventures prepare professional accounts. None are backed by trustees(?) nor are they fully collateralised. All your ventures are one-man bands. You've been in the game much longer than I have. With respect, that makes you more of a risk, given the average lifespan of Eve characters and their tendency to just go poof in the night, or say sayonara with a scam.
No, I'm not avoiding your question, but if I were you I'd be more careful asking questions that are even more relevant to you.
The old public financing of OS amounted to 175B secured and unsecured. The current private financing by Grendell amounts to 101.2B secured on BPOs and 35B unsecured, a total of 136.2B. The private financing by Grendell of my JV with Phoebe amounts to 91.45B secured on BPOs. This premium Bond offering, if successful, would add 10B, secured on BPOs.
I would be increasing borrowings by 4%, assuming I am liable for 100% of the JV, which I am not.
Quote: If there was trouble and Varo split who is Grendell obligated to pay out? Does he pay himself the money he is owed, and give the rest to the other bond holders or vice versa.
Grendell is obligated to pay 10B back to premium bond owners, end of story.
Quote: Then there is the issue of partnerships and who owns what.
I'm sorry, what's the issue? A partnership provides more security to an investor, Grendell in this instance. Phoebe and I are 50/50 partners in our JV and as such split profits 50/50 and have 50/50 liability. If one party cannot fulfil his responsibilities, the other party will.
Quote: You did release some nice accounts trying to be all professional.
Excuse me, I didn't try to be professional - I was professional. Those accounts were prepared in accordance with conservative RL principles. They were not wildly overstated, unlike some here I could mention.
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cosmoray
Bella Vista Holdings Corp
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Posted - 2010.07.31 21:22:00 -
[45]
My original IPO was audited, then my following ones weren't. I was able to raise additional capital without audit and was never asked to. I have never advertised that I would prepare accounts or be audited.
The time for questions is at the launch or discussion phase. If I was not able to raise capital without audit I would have done so.
Some of the problems I have with your post above is that after I ask a legitimate question about the discussion of a new bond/IPO you immediately went defensive and want to talk about my standards of reporting auditing. You could haved asked them in my launches or other potential investors could of or asked any questions they care to, and I would always answered.
Originally by: Varo Jan Excuse me, I didn't try to be professional - I was professional. Those accounts were prepared in accordance with conservative RL principles. They were not wildly overstated, unlike some here I could mention.
Secondly a lot of your answers come across that you are trying to state that you are better than everyone else, and a lot of times look down on people here. Not a very pleaseant trait.
I know I am no saint with some of my attitudes but I do try and answer all questions genuinely without getting snippy.
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Estel Arador
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Posted - 2010.07.31 21:38:00 -
[46]
Originally by: cosmoray (...)Some of the problems I have with your post above is that after I ask a legitimate question about the discussion of a new bond/IPO you immediately went defensive (...)
Secondly a lot of your answers come across that you are trying to state that you are better than everyone else, and a lot of times look down on people here. Not a very pleaseant trait.
(...)
Perhaps it would help if you wouldn't finish your legitimate questions with sentences like this one:
Originally by: cosmoray Lets be clear about something, there is no way in hell you would have been able to buy OSMS without full collateral lockdown.
Free jumpclone service|1092 stations! |
Varo Jan
Caravanserai Consulting
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Posted - 2010.07.31 21:53:00 -
[47]
Originally by: cosmoray Some of the problems I have with your post above is that after I ask a legitimate question about the discussion of a new bond/IPO you immediately went defensive.
I answered your question fully, probably providing more information in the process than you expected. That is not being defensive.
Quote:
Originally by: Varo Jan Excuse me, I didn't try to be professional - I was professional. Those accounts were prepared in accordance with conservative RL principles. They were not wildly overstated, unlike some here I could mention.
Secondly a lot of your answers come across that you are trying to state that you are better than everyone else, and a lot of times look down on people here. Not a very pleaseant trait.
I know I am no saint with some of my attitudes but I do try and answer all questions genuinely without getting snippy.
Your statement about me "trying to be professional" was snippiness incarnate.
Here's the thing, cosmo. Tone does not always come across well in posts. I do not consider myself better than anyone else, I have no delusions of elitism or grandeur. Finance has been my bread and butter for years, so yes, I do know that I was professional with my accounts. It's a simple statement of fact, nothing else. I'll grant you this - my hackles rose when a non-accountant made a snide comment about me trying to be professional with my accounts.
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Kazuo Ishiguro
House of Marbles
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Posted - 2010.07.31 22:33:00 -
[48]
Originally by: Phoebe Halliwel Say you want a Nyx...it's something like 10-15 carriers (?), which you can either build in lowsec, or buy dirt cheap ... and just jump the ship out to your 0.00 build location, then repro back into built cap construction parts. That's 15 jumps, as opposed to the compression service which ... seems significantly more in terms of freighter/JF runs and time spent at the other end building the cap comps, where you also have to factor in costs for BPCs or BPOs to build from.
You still get a significant saving on the number of trips from lowsec to 0.0, and with compression you don't have to worry about getting the necessary minerals into lowsec to build the dreads / carriers. Compression itself is good for doing this, but then you're paying two people to do a job that could be done by one alone.
The option that involves the least hauling depends on the location of the facilities you're using to build the components. As a bare minimum, you have to haul either the components or the minerals from your outpost to the CSAA, and the minerals have a smaller volume than the equivalent components. If you're building the components at the same tower as the CSAA, you can drag and drop without any extra hauling required, so compression is better.
If your component arrays are at another tower or you're building them at the refinery outpost, compression might be slightly less efficient for that stage, but the other savings can make it worthwhile.
The vast majority of quotes I provide are for 100% effective refine, so I suspect most people are going down the minmatar route and probably using starbases to build the components.
Quote: 1b chunks look more attractive from this point of view, regardless of the overall cost/saving.
It's more about saving time. Generally speaking, one needs about 15 carriers per SC. This takes at least 12 days in lowsec, ignoring the component build time, even if you have 15 carrier blueprints available. The overall amount of build time required for an equivalent compression job is about half that, and it can be spread over double the number of build slots, halving the required time again. This is also ignoring the considerable extra time and effort needed to get the minerals to lowsec vs. a highsec build location.
Quote: Only thing is, I'm basing this on the assumption you can repro caps into the construction parts to cut down build time.
This works - try it on the test server if you're not sure, or just stop at the reprocessing quote stage on TQ (assuming you have a packaged carrier handy). --- 34.4:1 mineral compression |
Phoebe Halliwel
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Posted - 2010.07.31 23:17:00 -
[49]
Interesting points, thanks for the info Kazuo, and sorry for diverting the Bond discussion Varo.
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Varo Jan
Caravanserai Consulting
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Posted - 2010.08.01 20:45:00 -
[50]
No problem, Phoebe. :) That was a very informative conversation.
Does anybody have any more questions as to how this would operate?
Does the idea appeal? Are people interested in an offering that is fully backed, repayable on demand, but is a gamble with interest nonetheless, albeit for relatively small sums?
Is 25m too high as a minimum? Lotteries seeem to be pitched at the 10m mark. Is 500m too high as a max?
An alternative I considered was 10m min, 100m max. I didn't go for it because I was concerned it might impose a much heavier admin burden. However, if there's a consensus that that setup would be preferable, I'd be happy to change the offering accordingly.
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Syds Sinclair
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Posted - 2010.08.02 04:05:00 -
[51]
Edited by: Syds Sinclair on 02/08/2010 04:10:05 ..Two statements:
1- Expected Value. 2- Lotteries are a tax on stupidity.
Edit - And a third for the people who are still confused:
3- Game Theory.
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Looby Loo
Minmatar
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Posted - 2010.08.02 04:39:00 -
[52]
There seems to be an intriguing lack of discussion in this thread about the actual merits, or otherwise, of the premium bond concept. Outside of zero rate fundraising opportunities this seems a relatively smart way to raise finance at a good cost (unless you're comparing it to 0%). Out of curiosity I presume you'll be keeping with tradition and issuing consecutively numbered bonds when bought in the same tranche? If so, and as long as the bond to payout ratios don't decrease, stick me down for 10 bonds. Just for fun.
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Tekota
legion industries ltd Veni Vidi Vici Alliance
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Posted - 2010.08.02 05:57:00 -
[53]
The idea is one with merit. However, personally, the interest rate - and yes it is an interest rate - is too little on this particular offering for me to consider.
As others have pointed out already, it is an interest rate, sure it's variable upon chance but the average monthly rate IS 1.5%. If I consider myself to be of average luck, I see a 1.5% return. If I filled the bond entirely then I know exactly the rate I'll get regardless of luck - 1.5%.
The operator of premium bonds in the UK refers to the rate as an annual prize fund interest rate - currently at an annual 1.5%, which is on the low side of real life investment returns but not *that* bad with a bank of england base rate still at 0.5% and very few "safe" savings rates on the market beating inflation (including premium bonds). 1.5% monthly in Eve however is a little too low for me - wish you luck with the concept however, and expect to see others like this in future.
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flakeys
DRAMA Inc
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Posted - 2010.08.02 07:11:00 -
[54]
Originally by: Varo Jan Does the idea appeal? Are people interested in an offering that is fully backed, repayable on demand, but is a gamble with interest nonetheless, albeit for relatively small sums?
I think the lack of investors comments or pre-reserving shares shows that there is little to no interest from MD investors.This however does not mean the idea has no chance but i think it is better suited where it was moved to , the WTS forums.
Speaking for myself even though you get your initial payment back it is still a gamble and i'd choose to go for a bigger gamble then and buy a lottery ticket rather then invest in this.However it is nice to see a fresh idea for a change.
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Jackie Fisher
Syrkos Technologies Joint Venture Conglomerate
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Posted - 2010.08.02 08:21:00 -
[55]
I guess like most UKers I know plenty of people with RL Premium Bonds. In my experience they fall into one of two categories:
- Financially illiterate - Doing if for æfunÆ
I donÆt think the Eve equivalent of the financially illiterate will invest so itÆs down to people who do it for fun and I suspect flakeys comment will be a common view from them.
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Varo Jan
Caravanserai Consulting
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Posted - 2010.08.02 21:23:00 -
[56]
Originally by: Looby Loo Out of curiosity I presume you'll be keeping with tradition and issuing consecutively numbered bonds when bought in the same tranche? If so, and as long as the bond to payout ratios don't decrease, stick me down for 10 bonds. Just for fun.
Yes, I will issue consecutively numbered bonds, and I intend to maintain payout ratios. Is that ten bonds if they're sold at 25m each or ten at 10m each, which is the suggestion I made later. I've not made a final decision on which way to jump, Looby - just wanted to be clear.
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Looby Loo
Minmatar
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Posted - 2010.08.03 01:14:00 -
[57]
Originally by: Varo Jan
Originally by: Looby Loo
Is that ten bonds if they're sold at 25m each or ten at 10m each, which is the suggestion I made later. I've not made a final decision on which way to jump, Looby - just wanted to be clear.
I'll take 250mill which ever way you carve it as long as the ratio of prize to total sum invested isn't diluted should you decide to offer additional bonds over the intital 10bill.
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Skarii TuThess
Lansez Innovations
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Posted - 2010.08.03 06:19:00 -
[58]
Although I believe that the nature of this offering is a bond and not a lottery (despite some randomness in the payout structure) I do believe that you are better off pitching this to those people who would play lotteries.
I think generally people in here are risk averse. They would rather have a regular on time payment of a certain amount rolling in that they can rely on. This may be because they need the coupon to pay for game cards, or to roll into other projects or to pay out on their own fund. People in here will look at the lower interest level and generally (I think) not be interested.
However I think in terms of the lottery market you have a significant advantage. One above posted commented that lotteries are a tax on the stupid - a bit of a cliche and not always true due to utility (ie I can afford to gamble ú1 a week with no impact on my life, whreas the top prize, no matter how unlikely, would have a significant impact upon it). But the poster is right that lotteries have a payout of less than 1. So you have two markets - MD here that expect a payout of 1.04ish or better and the lottery market that will take payouts as low as even 0.75
I think the real advantage you have over this form of bond is that you can offer much lower levels of interest than another form of bond. ItÆs effectively a sales method. ItÆs a good idea to do it this way as the finance is cheaper. However I do forsee a few issues. Lotteries are generally defined by a single top prize. I may know that a 10m ticket to a 1bn ISK lottery with asingle prize of an 800m carrier will have a negative payout, but I still might buy a ticket because of the mistaken principle that ôdude I won a carrier for 10m ISK!ö. ItÆs the top prize, or more exactly the ratio of top prize value to ticket that I think grabs people in. In the bond, even though they keep the ticket they may think that a 25m ticket with a top payout of 50m is not worth their time. Because of this I think you may be better off reducing tickets to 10m each. Not because I think people wonÆt buy a 25m ticket due to the price but because it increases your ratio of ticket cost to prize. I would also consider dropping all the side payouts and lumping it into either a single top prize (150m) or very few prizes (say 125m and 25m for second). People will be thinking 10m -> 150m and I donÆt thik they will care about the odd 1m payout (plus it makes it easier for you). Although I donÆt know the details of the finance, and wouldnÆt want to get involved with arguments about how much cash you can be loaned I would say that you may want to consider increasing the amount to 20bn if you believe that it will sell. The reason is again that I think lotteries look less at the chance of winning and more at the payout. For the same interest rate you would have a 300m payout for a 10m ticket. I donÆt know if this increased prize will drive demand for an extra 10bn, but I think it is worth considering.
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