David Bradley-Ward, chief executive of asset-backed peer-to-peer lender Ablrate, delves into the attractions of the Innovative Finance ISA
Ablrate may have the most exotic origins of any peer-to-peer lender in the UK, as it was borne out of a deal to fund an aircraft going from the Pacific Islands into Latin America. Chief executive David Bradley-Ward and his business partner, who both worked in the financing sector, were working on the transaction when the mezzanine investor pulled out at the eleventh hour.
“We persuaded the bank to take a slightly larger investment and the deal got done, but afterwards we realised we could have offered the direct investor 12 or 13 per cent returns and still made more money than the deal we did with the bank,” Bradley-Ward says.
“So we went to some of the P2P lending platforms at the time and asked if they would be interested in these types of deals. But nobody was interested in financing an aircraft.
“So we thought, if no-one’s doing it, we may as well do it ourselves. That’s when we came up with the original concept for Ablrate and we launched in July 2014.”
While the platform begun life focusing on aircraft deals, it was a “hop, skip and a jump” into other types of asset-backed lending, according to Bradley-Ward.
A pivotal moment for Ablrate was when it became fully regulated by the Financial Conduct Authority in March 2017, with ISA manager approval from HMRC following shortly after.
Ablrate launched its Innovative Finance ISA (IFISA) in August 2017, with IFISA administrator Goji providing the technology.
The platform’s tax-free wrapper is flexible, meaning that investors can withdraw and return money within the same tax year. It offers returns ranging between 10 and 15 per cent, which are all the more attractive when compared to the painfully low rates offered by cash ISAs.
The appeal was not lost on investors and almost 100 IFISAs were set up in just 48 hours, despite no
marketing efforts by the company.
“The flexibility of our IFISA has attracted quite a lot of people and the product has taken in almost £2.5m in funds since our 4 August launch,” Bradley-Ward says.
“It’s purely been word of mouth so far. We offer good returns, flexibility and no charges, which has attracted existing customers and new investors to the IFISA.”
The liquidity of Ablrate’s platform is another attraction, as its secondary market trades £30,000 to £40,000-worth of loan parts per day. Bradley-Ward “fundamentally believes” all P2P platforms should have a self-select product, which Ablrate currently offers, but he also acknowledges the mainstream attractions of auto-bid investing.
As such, the company is developing its own auto-bid product – that will be IFISA eligible – which is set to go live by the first quarter of 2018.
“You can’t throw away a very large market of people who want an autodiversified, auto-matched investment product,” he affirms.
“That’s why we’re working on a product like that, using the technology of our secondary market to service that segment of investors who don’t necessarily want to self-select.”
Going forward, it’s a case of developing new products, growing the team and boosting loan origination.
“We’ve been surprised at the size of the ISA transfers – they’ve totalled hundreds of thousands of pounds,” says Bradley-Ward.
“Some of the ISAs that have been opened are probably waiting to see a little more deal flow from us, which we’re gearing up to in the coming months.
“It’s a very exciting time for Ablrate and for the wider P2P industry.”
For more information on Ablrate and its IFISA, go to https://www.ablrate.com.