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Cash interest explained |
You will receive interest on balances in your platform cash account at the prevailing rate.
Embark Investment Services Limited acts as the custodian for investments on the Willis Owen platform and is one of our strategic partners that provides our Willis Owen ISA, GIA, Junior ISA and SIPP.
Embark places cash with a number of banking partners for safekeeping and to provide the potential for you to earn interest on money in your platform cash account. By managing cash in this way, it aims to provide better protection and a higher overall level of interest than if all funds were placed with a single bank.
The rates of interest paid by banks will vary. Embark retains a portion of the interest earned to cover its costs in managing platform cash.
Current Interest Rate
The table below shows the current customer interest rate payable on cash balances along with the amount of interest retained by Embark. The customer interest rate shown is that after accounting for interest retained by Embark:
| Date From | Customer Interest Rate | Interest retained by Embark |
|---|---|---|
| 25th March 2024 | 2.46% | 1.75% - 2.00% |
Embark can change the rate of interest at any time and it reviews the position at least quarterly. Interest is calculated and accrued daily and is credited to your account on the first of each month. If you transfer out, accrued interest is applied at the point of transfer. We will inform you if and when the interest rate changes as soon as is practicable.
Interest retained
The table below shows the yearly equivalent rates of interest Embark expects to pay based on a range of possible yearly interest rates it may earn.
| Interest Embark expects to earn | Customer Interest Rate | Interest retained by Embark |
|---|---|---|
| 0-1% | 0 – 0.46% | 0 – 0.54% |
| 1-2% | 0.46% – 0.94% | 0.54% – 1.06% |
| 2-3% | 0.94% – 1.46% | 1.06% – 1.54% |
| 3-4% | 1.46% – 2.02% | 1.54% – 1.98% |
| 4-5% | 2.02% – 2.61% | 1.98% – 2.39% |
| 5%+ | 2.61%+ | 2.39%+ |
Historic Interest Rates
To see details of historic customer interest rates, along with the amount of interest retained by Embark, click here.
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A rights offer (issue) is one way a business can raise secondary capital. It involves the issue of rights to a company’s existing shareholders that entitles them to buy additional shares in proportion to their existing holdings, within a fixed time period at a specified price. If a holder takes up their entitlement in full they will own the same percentage share of the company as they held previously.
Rights are usually priced at a discount to the prevailing share price to encourage take up. The more money a company wants or needs to raise the ‘heavier’ the issue so, for example, a 1 for 2 is heavier than a 1 for 10. Usually, the more substantial the rights issue the greater the discount to the market price at which the new shares are offered. However, prevailing market conditions and anticipated demand for the shares are also factors in determining pricing.
A rights issue can be raised for a number of reasons. For example, a company may have identified an acquisition target or could need money to fund the development of an attractive growth opportunity in its markets. On the other hand, a company may have poor cash generation and need the money to strengthen its balance sheet or even stave off financial collapse.
There are 4 options for shareholders:
The nil paid shares will commence trading at a price which equates to the difference between the ex-rights price and the price of the new shares. Subsequently, they will fluctuate with the price of the old shares until the rights issue completes and they become one share class. An example of how to calculate the theoretical ex-rights price is shown below:
Theoretical Ex-Rights Price = (the market value of ‘old’ shares + cost of new shares)/ number of shares held post rights issue
If Company A shares trade at 200 pence and it has a 1 for 4 rights issue @ 150 pence per share the calculation of the ex rights price for a holding of 1000 shares will be:
| Calulating ex-rights price | Holding 1,000 shares | Result |
|---|---|---|
| Original holding | 1,000 shares @ 200p | = £2,000 |
| Rights entitlement | 250 shares @ 150p | = £375 |
| Ex rights price | (£2,000 + £375)/1,250 | = 190p per share |
The nil paid rights will trade at 190-150 = 40 pence but this will vary as the 200p market price moves up or down.
A placing is an alternative way of raising secondary capital. Placings are usually used for smaller fund raisings as they are simpler and cheaper with less administration required than for a rights issue. No prospectus is required if less than 10% of the total equity value is raised and a restricted prospectus for larger amounts.
There are 2 types a straightforward placing or an open offer:
