A Visit With Assetz Capital

On Wednesday I flew to Manchester on invitation of p2p lending service Assetz Capital and met with Managing Director Andrew Holgate and his team. I learned how they operate and we spent the day discussing various aspects of p2p lending.

Assetz Capital does p2p lending to businesses secured by assets – mostly property. While the loans are big (usually the minimum loan size is 100,000 GBP), investors can lend starting with amounts of just 20 GBP. But typical investments are higher. In fact their first loan, which was for the amount of 1.5M GBP was funded by just 150 investors. Andrew Holgate pointed out that since each loan is backed by a security there is not as much need for investors to diversify to spread risk as with other p2p lending platforms.

Assetz Capital went live in April 2012. The founders and the management have extensive experience in finance, especially SME funding. One of the founders, Stuart Law, is the CEO of Assetz Group which has a 15 years track record in property investments. Assetz Capital could utilise the huge existing database of over 65,000 customers of Assetz Group when it started marketing its loan offers to investors.

Initially the main task at hand was to build trust. Trust not only on the investor side, but also from brokers, the main source of loan requests. Brokers wanted to be able to rely on the referred, approved loan requested getting funded within reasonable time (e.g. 2 weeks). While this was challenging in the beginning, Holgate says Assetz Capital has no problem now of getting multiple large loans funded simultaneously. Some of the loans fill as fast as 4 to 5 hours.  To get there Assetz Capital integrated underwriters into the process.

After Assetz Capital has thoroughly vetted the applying business and the underlying security – in fact every business is visited in person by an employee of Assetz Capital, it is presented to large investors which will then check the offer themselves and underwrite it – effectively saying they are prepared to finance large chunks of the offer.

Once the loan is on the marketplace, investors bid on it. Investors do see all documentation available on the loan and Assetz Capital says investor scrutiny and feedback is very valuable. Each loan request has a Q&A section where investors can comment.  Between funding and drawdown it usually takes a few weeks, depending on circumstances. In this time all documentation required is completed (e.g. first or second charges).

Assetz Capital is 100% owned by the management. Even so the business is very young it already turned profitable.

Broader product range

Assetz Capital started p2p lending with loans backed by real estate. Gradually they are now moving in financing a broader range of loan purposes, but always backed by asset securities. Assetz Capital wants to become the single access point for SME finance needs, as banks are no longer fulfilling that role. A surprising point in the talks for me was, when Holgate said, that actually their interest rates are higher than those charged by the banks, which is possible since many SMEs don’t get the funding they need from the banks any more.

On the investor side Assetz Capital will take steps to reduce the average time-span between funding and drawdown for investors. The company also considers in the medium term to grade loans into risks classes. At the moment different risks perceived by the risk manager at Assetz Capital are priced into the interest rates of the loans. So far Assetz Capital has refrained from assigning risk grades as it might be seen as giving investment advice to investors, which Assetz Capital does not do. Assetz Capital might also make it easier for investors to automatically invest into loans of a given risk/interest range. So far this was not necessary as the majority of investors enjoyed the process of the individual selection of loans. Continue reading

Ratesetter Very Satisfied With Partnership With Mobile Phone Provider

UK p2p lending company Ratesetter says its partnership with mobile operator giffgaff is very successful in driving loan demand. The partnership began in the end of 2013 and allows giffgaff to offer handsets to customers without an immediate upfront payment based on joint credit and fraud management technology.

Ratesetter says ‘The number of giffgaff loans doubled month-on-month in April’. Rhydian Lewis, CEO and Founder of RateSetter, said: ‘Our ground-breaking partnership with giffgaff shows the potential within the P2P sector to power a whole range of consumer services, starting with mobile phones, …’.
A spokesperson from giffgaff, said: ”This initiative has been revolutionary for our member base. We are now able to offer mobile handsets through our website, based on the easy provision of cost-effective loans provided by other members of the public. … ‘.

Interview with Martijn van Schelven, Founder and CEO of Geldvoorelkaar

Interview with Geldvoorelkaar founder Martijn van Schelven.

What is Geldvoorelkaar about?

Geldvoorelkaar.nl is about crowdfunding. We provide funds through our website for both SME as well as consumer lending. We provide loan-based funds. Borrowers borrow money and pay the investors back on annuity basis. Loans are on average 75.000 EUR. At this moment we mediate in approximately 2,500,.000 EUR each month. We facilitate screening on published projects, contracts and payment schedules between borrowers and lenders. Our start up was December 2010 and up till now we have approximately arranged credit for 500 companies. The total amount funded up till now is  31.5 milion EUR of which approximately  17.5 million EUR was funded in 2013.

What are the three main advantages for lenders?

  1. Direct ROI through annuity / interest
  2. Transparency on published projects, accessible and easy way of funding
  3. Extra incentives on most projects

What are the three main advantages for borrowers?

  1. Easy understandable debt against low costs
  2. Extreme commercial spin off, in addition to the funding
  3. Investors are not shareholders, but do act as such. Funded entrepreneurs keep their own independency

Martijn van Schelven

How did you start Geldvoorelkaar? Is the company funded with venture capital?

Me and my companion Edwin Adams were both one of the first franchisees for ING Bank Netherlands. A successful franchise concept which sadly was ended due to reorganisation within the bank. Our own bankshops were bought back by the bank. This money was invested in the development of Geldvoorelkaar. We are 100% independent.

Is the technical platform self-developed?

The platform was developed based on our own ideas. Centric (http://www.centric.eu/EU/Default) , a software engineer, developed the technical side of our platform and our backoffice. Continue reading

German P2P Lending Service Auxmoney Raises 16M US$ Series B

German p2p lending service Auxmoney completed a 16M US$ series B round, financed by Foundation Capital, joined by Partech Ventures and Scott Bommer, alongside existing backers Index Ventures and Union Square Venture. Index Ventures and Union Squre Ventures already invested in the Series A in the end of 2012.

Auxmoney was founded in 2007, and has originated 94.4 million EUR in p2p loans since.

The proceeds will be used for auxmoney’s ambitious expansion plans, by further enhancing the Düsseldorf-based lending and investment platform and expanding the company’s 60-strong team.

auxmoney CEO and co-founder Raffael Johnen said the investment marked a tipping-point for peer-to-peer lending in Germany, with the market set to go mainstream. “We are about to witness a major shift in consumer behaviour towards peer-to-peer loans. As clear market leader in Germany, auxmoney is right at the forefront of this development,” he said. “With our new partners on board, we are ready to turn crowdlending into an integral and mainstream element of Germany’s consumer finance landscape.”

Interview with Charles Egly, CEO of Pret d’Union

What is Pret d’Union about?

PRÊT D’UNION is the first and sole peer-to-peer lending platform accredited by the French Central Bank.

Thanks to an innovative disintermediation model, PRÊT D’UNION enables private individuals and institutional investors to lend money to borrowers directly through a secured bond marketplace, offering above-market returns on savings and low interest rates on consumer loans. Each party gets a better deal, bypassing mainstream financial institutions.

PRÊT D’UNION was founded in October 2009. In March 2011 the company obtained a broker license from the AMF (Autorité des Marchés Financiers – SEC equivalent); in July 2011 the company obtained a credit institution license from the French Central Bank. The marketing campaign has been launched in January 2012.

In 26 months the company has issued over €80 million in loans (€11 million in 2012, €43 million in 2013). For 2014, Pret d’Union plans to issue over €90 million in new loans.

Since its inception, PRÊT D’UNION has raised €18 million in equity. PRÊT D’UNION also enjoys the benefits of the French Research Tax Credit (CIR).

What are the three main advantages for lenders?

Pret d’Union propose 4 types of investment products:

– Fund #1 (Conservateur Court – Conservative & short duration) which invests in consumer credit with initial maturities of 2 years and 3 years granted to A Borrowers.

– Fund #2 (Conservateur Long – Conservative & long duration) which invests in consumer credit with initial maturities of 4 years and 5 years granted to A Borrowers.

– Fund #3 (Equilibré Court – Balanced & short duration) which invests in consumer credit with initial maturities of 2 years and 3 years granted to B Borrowers.

– Fund #4 (Equilibré Long – Balanced & long duration) which invests in consumer credit with initial maturities of 4 years and 5 years granted to B Borrowers.

The format of our funds is pretty similar to LC Advisors’ funds. However we added a few features: an ISIN code (FR0011605690 for Fund #2) and weekly quotes on Bloomberg (ticker PDUALNG:FP).

Yields for Lenders range from 4.4% p.a. to 7.4% p.a.

Chart 1: Purpose of loans (PU Conservateur Court)

What are the three main advantages for borrowers?

For Borrowers, the three main advantages are:

– better rates,

– fixed interest rates and constant monthly repayments (no revolving loans),

– A quicker process.

Which marketing channels do you use to attract lenders and borrowers? Can you share the current CPA?

To attract borrowers we mainly use: emailing, aggregators, banners, affiliates … (CPA below 200€ per borrower).

To attract Lenders, it’s mainly “word of mouth” and PR. Continue reading

P2P lending service Bondora is now authorised and regulated by the UK Financial Conduct Authority

Bondora is now authorised and regulated by the UK based Financial Conduct Authority (FCA). The FCA supervised peer-to-peer lending license is the only regime available anywhere in Europe that subjects peer lenders under regulatory oversight, supervising peer lending companies. Bondora is one of the selected few peer lenders who is now operating under a license and probably the first non-UK p2p lending company licensed by FCA.

“The authorisation and regulation are good news for our customers across Europe,” commented the CEO of Bondora, Pärtel Tomberg and added that customers will greatly benefit from the supervision of the FCA as well as the additional requirements Bondora needs to comply with in order to maintain the authorisation. “We are likely the only peer lender outside of UK who obtained this authorisation and this type of regulation is something that we have been looking forward for a number of years,” added Tomberg.

The interim licence increases the strength of the company by making sure that Bondora complies with the rules set by the regulator. These regulations will ensure that Bondora and other regulated peer to peer lenders provide a more secure, transparent and sustainable service to its customers. These provisions include among others conduct of business rules (in particular, around disclosure and promotions), minimum capital requirements, client money protection rules, dispute resolution rules and a requirement for Bondora to take reasonable steps to ensure existing loans continue to be administered if the firm goes out of business. Bondora already complies with most of the regulations however there is a transitional period during which all processes need to be made compliant with the standards required.

Until now Bondora, as well as most other peer lenders, operated without a specific license and regulation since a suitable regulatory regime did simply not exist. The UK based Financial Conduct Authority started issuing specific peer licences from April 2014.

Bondora is the meeting place that unites investors and borrowers from all corners of the world. Bondora provides easy access to two mutually beneficial solutions: borrowers find the best available financing with affordable monthly payments, while investors generate profit on loan interest. The company serves more than 90 000 Customers from 29 different countries and has issued over 16 million EUR in loans and its users have earned more than 1.6 million EUR in interest income. Continue reading

P2P Lender Lending Club Announces Partnership with Union Bank

Renauld Laplanche, CEO of Lending Club, announced today that Lending Club and Union Bank will partner to develop and offer products to  the 1 million customers of Union Bank. Lending Club has partnered with several smaller banks in the 12 to 18 months. Laplanche sees great potential for more of the 6,000 banks in the US to partner with the p2p lending industry and profit from leaner processes the new players offer.

Source: Lending Club

Renauld Laplanche speaking at LendIt 2014

Asked whether Lending Club has plans to go international he says the focus is on the US. But the time may come for international expansion but that is at least 2-3 years of.

Prosper Raises 70M

Prosper raises a 70 million US$ funding round led by Francisco Partners. The additional funding will be used for growth and expansion plans. David Golob from Francisco Partners, global private equity firm which focuses on information technology, will join the Prosper Marketplace Board of Directors. The funding round also includes investments from Institutional Venture Partners (IVP), one of the premier later-stage venture capital and growth equity firms, as well as Phenomen Ventures. Continue reading

International P2P Lending Services – Loan Volumes April 2014

Prosper had a very good April. In UK especially the platforms for property secured lending grew their volume compared to last month. I added two new services to the table. I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.

Table: P2P Lending Volumes in April 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.