Invest in convertible bonds

At, we are committed to supporting businesses with a positive impact at every stage of their development. In their growth phase, for example, or when they are scaling up, we offer investments in bonds that are convertible into shares. This is a financial tool that offers many advantages for companies, but is still relatively unknown to investors. Find out more in this article.

Convertible bonds, a hybrid product

What are convertible bonds?

Traditionally, there are two major types of investment products for companies. On the one hand, there are shares in a company's capital, and on the other, there are bonds, a kind of loan that the company takes out from the investor. Between these two financial products exists a third option: bonds that are convertible into shares.

Convertible bonds have the same characteristics as regular bonds: they provide a fixed annual interest rate and are repaid according to a predetermined repayment schedule. The difference is that convertible bonds can be converted into shares. This conversion is, of course, subject to specific conditions set out in the bond issue contract signed at the time of investment.

How are investors remunerated with convertible bonds?

As with regular bonds, you get a return through interests from the first year on. Convertible bonds on have so far yielded between 5% et 10% gross annual interest. After that, if a contractually defined event occurs, you have the option to convert your bonds into shares at a predetermined price.

However, keep in mind that the conversion into shares involves a significant risk for the investor. The scenarios that trigger a conversion are sometimes accompanied by a deterioration of the company's financial situation. Therefore, at, we usually determine a conversion parity based on the last known valuation of the company, then applying a discount on the shares to compensate for the risk taken (5-30% on average).

If no conversion takes place, investors are remunerated in the same way as for regular bonds. In addition, there is sometimes a non-conversion bonus, usually paid at the end of the repayment period, to compensate for the loss of potential capital gain that would have resulted from the conversion of the bonds into shares.

Investing in convertible bonds

What type of companies raise funds in convertible bonds?

Convertible bonds are often used by startups and SMEs that want to grow and develop. They need funds to finance their growth, but do not want or need to open up their capital. Unlike raising equity capital, convertible bonds enable companies to maintain their capital structure, while accessing medium- and long-term financing. Furthermore, issuing bonds is an easier and more flexible financial mechanism to implement, both from a legal and governance point of view. Depending on their financial strategy, business plan and nature, some companies will favour repayment and others conversion.

Investment in convertible bonds with TOWT

A way to finance the acceleration of impact enterprises?

Convertible bonds are a very useful financial instrument to finance start-ups and SMEs with a positive impact. To successfully complete all stages of their growth, enterprises need diverse financial instruments. Convertible bonds allow these companies to finance their growth flexibly and strategically.

It's LITA's mission to democratise the financial sector. Therefore, we also offer the opportunity to invest in financial assets that are less known or less accessible, like convertible bonds. This not only allows you to drive the growth of companies which align with your values, but also gives you access to financial assets traditionally reserved for professional investors.