How P2P created an alternative form of consolidation
FOR YEARS now, analysts have been predicting that a wave of consolidation is just around the corner for the UK’s peer-to-peer lending market. Yet another year has just passed without any significant mergers or acquisitions taking place.
However, a different type of consolidation is beginning to emerge. One where banks and alternative lenders develop strategic partnerships on specific projects, while remaining independent (and even competitive) in other areas of their business.
Over the past 12 months, a number of innovative new partnerships and deals have brought together the traditional world of banking and the modern features of P2P lending.
In August 2018, high street behemoth Barclays took a minority stake in business finance provider MarketInvoice. Under the terms of the deal, Barclays will offer MarketInvoice’s invoice finance products to its business clients and will also fund £1bn worth of invoices via the platform.
Meanwhile, asset-backed lender Ablrate took an equity stake in fellow P2P lender Huddle last year, in a strategic partnership that will see the two platforms share their investor bases. At the time, Huddle described the partnership as “complementary, not conflicting”, since the two firms targeted different types of loans.
These partnerships suggest that alternative lenders are finding new ways to collaborate without giving up the ‘alternative’ label that has made them so attractive to retail borrowers and lenders in the first place.
And this is only the beginning of this new kind of consolidation. Within the P2P property sector, there have been some discussions on how various platforms can work together to centralise their offerings and increase liquidity, while maintaining their independence.
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Some property-focused P2P platforms have been looking into the idea of a centralised platform for property loans, which would allow multiple platforms to co-fund certain projects, thereby enhancing the overall liquidity of individual loans.
“If the terms are right, we would certainly want to be involved in that,” said Filip Karadaghi, chief executive of property P2P lender LandlordInvest. “Everyone wants to get bigger and incorporation just makes sense as a way of doing that.”
The P2P space is all about disruption, so it makes sense that P2P platforms would attempt to do consolidation a little bit differently too.
Perhaps the long-awaited wave of consolidation is already upon us – it just isn’t following the old fashion rules of M&A.