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Peer2Peer Finance News | August 23, 2019

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Most board members of P2P trusts have skin in the game

Most board members of P2P trusts have skin in the game
Marc Shoffman

THE MAJORITY of board members of peer-to-peer investment trusts have “skin in the game”, research has revealed.

Canaccord Genuity research has assessed the pay and investments of board members of investment trusts. The analysis included funds focused on the P2P sector.

It showed that the highest annual pay packet among P2P investment trusts is £50,000, taken by the chairmen of the Funding Circle SME Income Fund and Victory Park Capital (VPC) Specialty Lending.

The amount of “skin in the game” among the boards marks an interesting contrast to the actual P2P platforms where there are differences in how ‘invested’ a platform is and how much of its own funds it is prepared to risk. For example, some will take the first loss on a default while others rely on provision funds.

All board members of the Funding Circle SME Income Fund have put their own money in the investment trust, according to the research.

Samir Desai, co-founder of the Funding Circle platform, who sits on the investment trust’s board, has put £152,775 into the fund.

This is the highest among its board members, followed by £110,349 invested by non executive director Frederic Hervouet. The Funding Circle SME Income Fund board chairman Richard Boleat takes the highest annual fee on the board at £50,000 and has invested £5,157.

The trust’s board members Jonathan Bridel and Richard Burwood, both non-executive directors, have also invested £5,157 and their annual fee is £40,000 and £30,000 respectively.

Desai does not take a fee and Hervouet has an annual fee of £35,000.

In contrast, only one of the four board members of P2P Global Investments has invested their own money into the trust. Simon King, a non-executive director for the trust and senior investment manager for Numis, has £162,343 in the fund. He is paid an annual fee of £39,750 as well as non-executive directors Michael Cassidy and Mahnaz Safa. Chairman Stuart Cruickshank received a yearly fee of £44,750.

Read more: Funding Circle SME Income Fund plans new share issue

Richard Waldron, chairman of the Ranger Direct Lending Fund, takes an annual fee of £15,000 and is the only board member with an investment, at £11,141. K Scott Canon, chief executive of the Ranger Capital Group, takes no fee while non-executive directors Matthew Mulford and Jonathan Schneider received £12,250 and £13,750 respectively.

Meanwhile, all board members of VPC Specialty Lending have “skin in the game”. Richard Levy, who is chief executive of VPC and chairman of the board of directors of Victory Park portfolio companies, receives no fee. However, he has invested £971,902 into the trust.

Chairman Kevin Adcock gets an annual fee of £50,000 and has invested £38,125. Kevin Ingram, a non-executive director and chair of the trust’s audit committee, received £35,000 and has put in £26,663. Elizabeth Passey and Clive Peggram, both non-executive directors, get an annual fee of £30,000 and have put in £7,625, and £57,148 respectively.

The Honeycomb Investment Trust’s board members do not have any investments in the fund. Chairman Robert Sharpe, also a non-executive director of Aldermore, takes home the highest fee of £30,000, while non-executive directors James Coyle and Ravi Takhar received £25,0000.

Read more: P2P investment trusts’ share prices present a golden opportunity

Canaccord Genuity’s research claims that clients value seeing board members and directors invested in the company.

“While no guarantee of superior performance, in order to align interests, investors look for directors and managers to have a meaningful personal investment in the companies which they direct and/or manage,” it said.

“This is the unequivocal view of our clients, and we strongly believe that skin in the game sends a clear and powerful message to both existing and potential investors.”

Read more: Funding Circle’s fund unfazed by Trump as income quadruples