I've been sent (solicited) promotional material for a Bamboo Bond (lend money to a company that wants to set up a Bamboo plantation in Nicaragua).

It's not quite in the too good to be true range, but it's obviously a high risk investment.

The company selling it seem fairly legit (good people on board, fairly transparent corporate structure, Yale professor signing a feasibility study, an actual FSA regulated trustee) and the Bamboo story checks out (it is a very fast growing and useful timber, the market is growing, etc). The bond itself is structured so that they initially pay quite a meh rate and the juicy interest happens in 2016 onwards where the rate jumps to 15% and then to 30% in 2018:

Year Interest Net interest (after trustee fees)
2012 3.79% 2.79%
2013 4.55% 3.30%
2014 5.30% 3.80%
2015 7.58% 5.83%
2016 15.15% 12.95%
2017 22.73% 20.53%
2018 30.30% 28.10%
2019 30.30% 28.10%
2020 30.30% 28.10%
2021 34.09% 31.89%
2022 34.09% 31.89%
2023 37.88% 35.68%
2024 41.67% 39.47%
2025 41.67% 39.47%
2026 41.67% 39.47%

This has an NPV of almost 1.5x initial investment amount even assuming an 8.5% discount rate and a -30% fudge factor (tax, USD -> my currency losses, whatever else).

The investment would be ~10% of semi-liquid net worth (cash shares and short term interest-bearing investments - not including pension and home equity). I'm fairly conservatively invested in general and well paid so I could take a loss if I had to.

I'm just very wary of TGTBT investments and anything unorthodox. This is on the borderline and certainly seems a lot more plausible than your normal super-awesome-hard-sell property investment so I didn't reject it out of hand but nor am I making a five figure investment without being very sure.

Anyone have any useful advice / resources / questions to ask the salesman (sorry "advisor") / horror stories / whatever ?

is early repayment allowed? Is this some kind of scheme where they promise monster returns in years 4-15, but fully intend on just paying you back in full in year 3, probably by issuing the same structure bond to a new investor.

I was wondering the same thing. If they do repay early make sure there is some form of penalty. Otherwise I would pass.

Did they tell you how much land they had? Or are planning on acquiring? Or where in Nicaragua they were planning on putting the plantation?

Really got to think about outlying factors like politics and stability in these long term foreign deals. A somewhat relative example: A buddy of mine invested in vacation property in Mexico. Everything looked good on paper and was doing well, then the drug violence crippled everything.

I like bamboo and have seen some pretty ingenious applications recently. Nicaragua is a great place to grow it cheap and well with all the ash in the soil. They would probably be competing with half of Asia though. The back end does seem a little optimistic. Very interesting.

+1. Looking at those numbers it seems very likely they're going to pay early if it's possible. The bond almost seems structured to punish them for not refinancing tbh.

Very good point, will definitely have to ask about if and how they can refinance. It's definitely forgettable without the last few years.

"The intention of issuing the bonds is to raise a total of $12,000,000 for the financing of around 1,800 hectares of Guadua Bamboo plantation across Central America."

The initial plantation is ~900 hectares near the Rama port on the Atlantic coast of Nicaragua, then they plan to reinvest in ~700 outside Nicaragua to reduce political risk. The parent company already owns 300 hectares in the same general region so they claim the cost numbers are backed by experience.

Totally illiquid bonds subject to appropriation, weather, and currency risk? Really?

He beat me to it. Weather. They get tropical storms all the time and even the occasional devastating hurricane. Floods would be a huge concern especially on the Atlantic coast.

How well would the bamboo hold up through something like this? That initial 4-5 years could get wiped out in a week.

You NEED to get screwed on this deal...
So that you learn some valuable lessons.

How can u say that? He's gonna get a whole 2.79% next year!

Can you smoke Bamboo

Question is did OP smoke bamboo?

I'm not sure if this is the company OP is talking about, but I found this blog post an interesting read.

http://winterboggs.blogspot.com/2011...what-sort.html

Here in europe we have nearly the same products at sample with teak, or green energy.

I had a deeper look to the green energy ( wind )

The expected return was 9% / year, thats doable if you invest yourself in a own product on your own land.

But with this organized product its a differrent story.

They have a daughter company that make the complete development for high prices and you get no share from that profits. Also they spend 25% of the invested money in commercials and promotion !!!!!!

So its not a complete scam, but you get from the possible 7-10% maybee 2-4% and the other money is gone out of your pocket.

You have no other choice than to research if it is really solid.

It's also panda food. Or was it koalas?

They may be planting bamboo yes, but what is their strategy to sell all the crop (and pay their investors back)???

I have also read their pdf presentations, in which they mention and aim to sell the bamboo at 4$ per lineal meter! Sorry but this is impossible. A retail operation may sell bamboo at that price but is definitely not the current farm gate price.

Here is an interesting article about the future of trading bamboo poles.

Don't see why you would ever consider investing in a Nicaraguan company.

Edit: There's a reason they are soliciting you and not some venture capital firm that could easily finance this.

Bamboo is being planted in the US.

http://www.bamboo.org/index.php

http://www.booshootgardens.com/Homepage.cfm

The structure doesn't make very much sense. You don't want to buy the debt of the company in a structure like this. I anticipate that they'll pay you for the first few years to get you comfortable. At the same time they'll be taking some crazy risks in order to fluke out the return they promise you. They probably own land in the country but it isn't used for Bamboo farming and they got it really cheap. It's probably pretty easy to pay someone from Yale to sign off on it.

You're much better off buying something you understand and that is passive in your local area. Buy a Laundromat that already makes money, for example. Even if this structure were 100 percent legitimate it's not a good investment. You sound like you want to do it.

A legitimate company would sell equity and not bonds. You're giving them a government interest rate for the first few years when at best they should be paying 7-10 percent the first year.

Land ownership confuses people. You can buy land with no road access in Nevada for 100 bucks and acre. It's worthless because there is no access to it. I think you'll find out the same thing in this situation.

The page seemed to have removed from the site. Strange since I've read the article a while ago and it was all about the fact that growing Bamboo for poles is never gonna work because you will be transporting air and therefor the cost of transport are too high. The story also made the claim that people offering bamboo investments for poles are scams.

Strangely now the website is selling poles and is offering investments for Bamboo plantations to sell poles.

It really looks like a dodgy company with a lot of nice articles that you can find all over the web just put in other words pretending to be a leading Bamboo expert.

I think Bamboo is a perfect investment whit a reliable company and a businessplan that also covers a marketingplan combined with a finished product.

The plan from the Topic Starter looks dodgy to me so does guaduabamboo.com obviously people that is trying to get their share of the green investment possibilities. I think working with these two it's a guarantee to loose your money.

Holy 2011, Batman!

Is this just a weird way of saying that the product is bulky and therefore expensive to ship? I don't see how air is particularly burdensome to have in a shipping container.

I've been meaning to look into bamboo for it's investment potential here in the US. I had some research to do on the Lacey Act and wound up derailing off to the point of reading up on bamboo and its applications + growing acceptance + sustainability. Just casual chatting with the flooring guy at Home Depot recently, he said people were warming up and starting to buying the engineered version for flooring fairly often.

Seems like a sensible enough material to focus on with the various efforts to curb deforestation going on, Lacey Act being one.

commercial clients of mine are still hesitant with bamboo. I think this is primarily due to the look because most seem to like the green aspect of it. residential flooring use is way up in the past few years and i can see it continueing to grow in the future. people will always like the warmth of wood though, so i don't know if bamboo will ever take over the #1 spot in flooring.

Awesome spam bump from 7 years ago (post above me, deleted soon). I wonder if OP collected his 28.10% interest this year.

Imagine if OP had put this money in the made-up-digital-coin ponzi instead of a bamboo plantation ponzi. Got to be discerning in your ponzi choices.