ZOPA will not dump its retail investors in favour of “fast money” hedge funds, its head of capital markets told Peer-to-Peer Finance News.
Europe’s largest peer-to-peer lender has recently dipped its toe into securitisation, but Jonathan Kramer said that having a balance is paramount.
“I think all platforms are trying to find more stable sources of liquidity and as we see it, retail is an important part of that strategy,” he said. “So retail investors will continue to be a very important component of Zopa and you won’t see that kind of retail/institutional split at Zopa that you find in the US.”
The US market is dominated by institutional investors, but Kramer said that they are trying to “pivot back to retail” as they “went too far in the direction of institutional capital”.
“We’re looking for long term sources of stable capital, which means it’s not fast money investors or hedge fund investors,” he said.
“In the States there was a wall of money that came very quickly and seemed to depart very quickly, so we’re looking for long term, sticky sources of capital. That will either be permanent capital vehicles that are dedicated to our sector, or it’s going to be real money investors like insurance companies and pension funds.”
Zopa’s £138m securitisation, announced in late September, was led by investment trust P2P Global Investments and arranged by Deutsche Bank. Kramer said that it was oversubscribed and Zopa is “definitely” planning more issuances.
“I think things like securitisation help generate confidence and our ambition is for Zopa’s lending to be considered part of a core fixed-income allocation as opposed to an alternatives allocation,” said Kramer.
Zopa recently announced that it is applying for a banking licence and will be launching a digital bank to sit alongside its P2P operations. It expects to gain regulatory approval in 15 to 24 months.