2018: The survival of the fittest for P2P lenders?
THE PEER-TO-PEER lending sector has seen little M&A activity to date and few platform closures. But could all that change in 2018?
Last year saw a number of platforms complete funding rounds to strengthen their balance sheets and provide finance for future growth.
But the sector is ripe for consolidation next year, according to Stuart Law, chief executive of peer-to-peer business lender Assetz Capital.
He predicts there will be a reduction in the number of active players in the market.
“I think there will be further consolidation, as there are fewer and fewer platforms that are growing and have achieved scale,” he said. “I think it is inevitable.”
John Goodall, chief executive of buy-to-let specialist Landbay, expects the number of P2P platform launches to stall in 2018. Given the proliferation of lending platforms over the past few years, he says it is becoming increasingly difficult to carve out a niche.
“I expect less P2P platforms to launch going forward,” he said. “A lot have launched over the last three years and I think if you haven’t launched yet, increasingly it becomes harder to launch a new platform in terms of brand and the like.
“Some platforms are getting quite large now, so it is difficult to compete with them. To create a new niche that no-one is doing is definitely harder.”
Goodall expects the P2P property sector to grow its loan origination next year, as banks withdraw funding from certain parts of the property market.
“In the areas we operate in, we still see a lot of opportunity for growth,” he said. “We would expect to increase our market share.”
Read more: M&A feature: From disruptors to dealmakers
However, Neil Faulkner, managing director of P2P research agency 4th Way, does not expect a huge increase in M&A activity in the P2P sector next year.
“I don’t personally expect a peak to occur fast enough, or to conclude fast, enough by December of next year,” he said. “I think most P2P lending platforms still have enough room for organic growth before competition really starts to hit them.”