Lending Club scandal was good for business, says Ranger Direct Lending
THE LENDING Club scandal was good for peer-to-peer investment funds, according to Ranger Direct Lending’s Bill Kassul.
The investment manager of the peer-to-peer focused fund told Peer-to-Peer Finance News that since the governance debacle at the US P2P lender, platforms who previously refused to comply with Ranger’s criteria are coming back to the negotiating table.
“Some of them were getting out of control,” said Kassul. “Late last year and earlier this year they were making such demands on the funds. They wouldn’t do what we wanted in terms of transparency or agree to let us approve the underwriting on the loans. Now that the market has cooled down, they’re willing to talk again.”
Questions over Lending Club’s lending practices resulted in the high-profile departure of its founder and chief executive Renaud Laplanche in May.
Ranger’s half-year results yesterday showed a net profit of $9.94m (£7.5m) over the first half of the year and Kassul said that his company “definitely has more room to deploy investment capital”.
“We have delivered returns between 70 to 80 basis points each months for the last six months,” he said. “We have a good stable of platforms and are always bringing on new ones.”
The firm is in advanced talks with two US platforms that are set to be confirmed in the coming weeks.
Today Ranger announced that it will be conducting investor meetings next week as it plans to spend the proceedings of August’s share placing this month.
However, Kassul added that the portfolio team has been focusing on shortening up the length of the loans and taking on more security in anticipation of a market downturn. “I don’t think this will happen in 2017 – the US outlook is pretty stable – but we’re planning for a rainy day,” he said.
“When the down credit market hits, there will be consolidation and some platforms will go belly up,” he added.
“But if we can preserve capital in a down market and give some kind of returns then we will attract all the pension funds and endowments. Even preserving capital alone, we’d beat everyone else in a down market.”
Ranger Direct Lending is listed on the London Stock Exchange, but primarily invests in US debt. However, Kassul said he would love to invest in UK P2P platforms in the future.
“There are some great lending platforms here, but we want more than 12 per cent return and the opportunities that deliver more than 12 in the UK are just too risky,” he said.
“The ones that fit our investment profile usually deliver returns between seven and nine per cent. I would love to work with the likes of LendInvest if we opened a lower yield fund.”