Bond financing for international expansion: lessons from LHM Group
How LHM Group used bonds to reach experienced investors and support its international expansion
Expanding into a new market takes capital, and the instrument a company chooses also decides which investors it reaches. LHM Group, a developer of premium mountain homes in Norway and the US, used bonds to support its international expansion plans. The bonds were placed with investors through Letsinvest and are listed on Axiology’s infrastructure.
LHM has built mountain homes for more than 20 years. Its first US property, in Montana, sold for USD 11.5 million within three months of being introduced to the market. The group now develops larger mountain-home communities and ski-in/ski-out apartment projects.
How bonds help companies reach experienced investors
For LHM, choosing bonds started with the audience. A bond is a product that more experienced investors find familiar and understandable, and offering one was also a way for the group to build its reputation in the market. Different investment instruments reach different investors, so adding bonds allowed LHM to reach a broader range of them.
The bond issue had a second purpose. LHM wanted to show the market that it can manage and work with other types of investment instruments, and to increase the group’s visibility in the process.
LHM’s bonds were placed with investors through Letsinvest, a Lithuanian real estate investment platform that connects real estate developers with investors. Axiology registers the bonds on its regulated DLT infrastructure, records bondholders’ ownership and safekeeps the securities until maturity.
Benefits of a broader investor base
Bond financing has given LHM greater flexibility in financing development projects and supported its ability to take on larger opportunities.
For investors, it opens access to a different kind of project. LHM says a broader investor base gives more people the opportunity to take part in distinctive projects abroad and contribute to the success of a Lithuanian business developing large-scale international projects. Such opportunities are only partly available in the Baltic markets.
Bond financing for international expansion
LHM’s vision is to become an international real estate developer that combines Lithuanian reliability, Scandinavian quality and the potential of the US market. The group aims to expand its operations into some of the world’s largest and most liquid markets, while keeping a balance between stability in Europe and growth opportunities across the Atlantic. It describes the bond issue as a strategic step to support the implementation of these expansion plans.
The US is where LHM sees its biggest opportunity. Its first project there showed that the LHM concept translates successfully to the US market. The group now sees room to grow its portfolio in key mountain destinations, build awareness of the LHM brand and establish it as a recognised name in the US mountain property market.
What to consider before using bonds to finance growth
According to LHM, a company considering bond financing needs:
1. A clear development strategy
2. A proven business model
3. A realistic plan for how the capital will be used and repaid
Bond financing also brings obligations. LHM notes that it requires discipline, transparency and a clear understanding of the financial commitments involved.
LHM frames this as a responsibility to its investors. Laurynas Mitkus, Founder and Co-Owner of LHM Group said: “For our investors, the most important thing to know is that we approach growth with the same responsibility as we approach our projects. We are ambitious, but we are not interested in growth at any cost. Every new development, market and investment decision has to make business sense and strengthen LHM for the long term. When investors place their trust in LHM, we understand the responsibility that comes with it. Our ambition is to turn that trust into sustainable growth and long-term value.”
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