Mainstream Still Seeking Way Forward For AltFi Investments
Mainstream finance’s enthusiasm for the direct-lending sub-sector of alternative finance has understandably abated after some poor investment experiences.
Pollen Street Secured Lending (PSSL) has appointed Waterfall Asset Management to be its delegated portfolio manager, taking over from Pollen Street Capital (PSC).
As part of the takeover, Mirabella Financial Services will act as PSSL’s alternative investment fund manager (AIFM) alongside Waterfall.
The US asset management giant first proposed a takeover of the embattled fund, proposing a 900p all-cash approach, in February 2020.
Under today’s deal, Waterfall will be paid 0.75 per cent net asset value (NAV) every month minus Mirabella’s AIFM fee, with the total fees payable to both parties being capped at £2m for the period between 14 August 2020 and 31 March 2021.
The board said the new fees are a “significant reduction compared to the previous management fee arrangements”
Pollen Street Secured Lending has also agreed to pay its former manager “a sum representing the approximate balance of the unpaid base management fee, including the unexpired notice period.”
Simon King, chairman of Pollen Street Secured Lending, said: “The Board is pleased to effect the change of Investment Manager, something which the Board unanimously and firmly believes is in the best interests of shareholders. This follows a period of intensive and rigorous preparatory work undertaken by Waterfall and its legal advisers.”
The hunt for a new manager began earlier this year after PSSL’s relationship with former manager Pollen Street Capital (PSC) turned sour, subsequently leading to the fund serving its manager notice to terminate the relationship between the two.
Loan Latest
- Our latest loan offering, the property-backed offering from WeBuyAnyHome.com, has attracted 32 per cent of the £150,000 it is seeking. The loan is rated A+ by our credit committee, and yields 8 per cent over a three-year term. For more detail, login.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
- Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.