Funds Flow To Hot FinTech Sector

It’s deal time in the Fintech sector, with IPOs and funding rounds coming to the market, as previously reported here, in profusion. Our friends at Altfi offer reports of two major recent deals.

Lending platform CrowdProperty has bagged a £300m five-year institutional funding line with a new unnamed UK asset manager.

The latest investment is designed to complement CrowdProperty’s existing capital sources.

To date, the lender has funded the development of over 1,500 homes worth £297m across the UK, originated £181m of agreed facilities and lent £141m.

“Investor liquidity is higher than ever due to the deep property expertise, high-quality origination, 100 per cent capital and interest payback track record and trusted brand built since 2014,” Michael Bristow, UK CEO and founder, said.

“This is naturally attracting more institutional sources of capital looking to work with the most proven, highest quality players with deepest asset class expertise and market-leading track records.”

Bristow also believes that despite the £300m injection, CrowdProperty is still yet to realise its full potential in the UK market.

Having recently made its first international expansion, launching in Australia in May of this year, CrowdProperty looks set to begin making its mark Down Under.

After aborting its earlier listing plans in 2019, property finance platform LendInvest this morning filed its paperwork for a London IPO next week.

The listing, which is set to value the company at £255.6m, will see LendInvest raise £40m from its new share offering due to take place on 14 July.

“From a standing start we now have £2.8bn FuM [funds under management], and count some of the world’s largest financial institutions as investors,” said LendInvest’s founder and executive chair Christian Faes.

“We have achieved this by building a platform that offers speed and certainty to borrowers and intermediaries while offering investors access to an attractive asset class with compelling risk-adjusted returns.”

“We are thrilled to welcome our new shareholders to the business and look forward to beginning the next stage of our journey.”

With this fresh cash LendInvest, under the leadership of CEO Rod Lockhart, will invest in the company’s growth by accelerating its tech roadmap and expanding into new property finance products.

“This IPO will provide us with the resources and flexibility to continue investing in our technology, expand our range of products and enter new segments of the market,” added Lockhart.

LendInvest had planned to IPO in 2019, however after several ‘pre-IPO’ funding rounds, the plan was shelved after Funding Circle’s disastrous market debut and the torrid market conditions which left the company nursing a £2.2m hit to its profits.

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 £24 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 2020/21 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.

Tags: Altfi, FinTech, IPO


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.