Gig economy £5m bond to close despite prospects for market shake-up

A leading digital financial services firm is pressing ahead to close a £5m ($6m) bond to fund gig economy entrepreneurs despite an impending tribunal ruling that could blow a hole in how workers in this sector are employed.

APS financial said its four-year bond is set to close at the end of this week. The firm said the bond will pay 7% interest a year, compared to current typical bond rates of just under 2% to just over 3%.

But the move comes as gig economy firms await a key employment tribunal ruling this autumn that will decide whether Uber drivers in the UK should be recognised as employees at the cab hire service, or remain as self-employed hired hands.

The case has been brought by 19 drivers, backed by the GMB union, who say they should receive employee entitlements such as holiday and sick pay as well as a guaranteed minimum wage. This is likely to push up costs at Uber, which currently charges lower fares than rival cab services.

But APS financial chief executive Rich Wagner said: "The bond is progressing well, and in this final week is when sophisticated investors make the decision to commit."

He added: "The Uber ruling does have the potential to impact the digital economy, but from what we see investors are undeterred about this sector."

However, Wagner added he was "hopeful" of hitting the bond's £5m target on Friday.

APS financial said that cash raised would be lent to entrepreneurs to spruce up their spare bedrooms for paying guests or purchase tools and vehicles.

Accountants PwC said the UK's "digitally literate and entrepreneurial population" has seen its gig economy grow at the fastest rate in Europe with sales almost doubling to £7.4bn in 2015 compared to the year before.

Firms such as home accommodation service Airbnb, odd-job site TaskRabbit, takeaway food service Deliveroo and Uber have led the sector's growth.

In the decade since APS financial launched it said it has helped 70,000 UK start-ups and small businesses.

APS financial said it would also use some of the cash raised to upgrade its IT services.

The company said investors have until 28 October to invest between £1,000 and £250,000 in the APS financial bond.

However, the APS bond cannot be traded on the stock market, unlike corporate or government bonds, and therefore locks investors in until full maturity.