It’s a long-running story. The latest development in the general theme of peer-to-peer (P2P) lenders joining the mainstream of financial services comes courtesy of LendInvest. SKY News reports that “the online property finance hub Lendinvest is plotting a £500m stock market flotation that will provide a fresh test of investors’ faith in a fast-growing but volatile area of the non-bank lending market”.
Sky News has learnt that Lendinvest, which was set up in 2008 and has so far lent roughly £2bn to help buy, build or renovate British homes, has appointed Lazard, the investment bank, to advise on its strategic options.
Sources said on Thursday that the company, which is run by chief executive Christian Faes, was likely to choose a syndicate of banks by the end of the month to oversee an initial public offering (IPO) that could take place as soon as this year.
They added that Lendinvest would seek a valuation of at least £500m in any public share sale.
The jury’s got to be out on this until, at the very earliest, the pathfinder prospectus for the IPO is published. We welcome the news in principle, but we’ve published our reservations about the Funding Circle issue. And the P2P sector in the UK cannot and must not have an embarrassment like the Lending Club issue in the US. There’ll be more on this topic in Blogs and in News later.
Loan Offer Latest
Money&Co. has facilitated just under £15 million in P2P loans since 2014. As we write, the latest loan offering is set to follow shortly.
A Process Guide To Innovative Finance ISA Investment
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 almost £15 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.
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:
The ISA allowance for 2018/19 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.