GLI FINANCE has said that the growth rates of some of the fintech and peer-to-peer platforms it has backed have been slower than expected but hopes that equity fundraising rounds will boost the portfolio.
The alternative finance firm highlighted the valuations of platforms owned through its investment portfolio subsidiary Fintech Ventures as a high risk.
“Most platforms are still only in the first three or four years of operation,” GLI Finance said in its annual report for 2017.
“Their growth rates have all been slower and more capital intensive than was initially anticipated when the group’s first investments were made.
“There remains a risk that some platforms may not be successful in the longer term, either as a result of lack of loan funding, lack of working capital funding or difficulties in establishing a competitive position in their chosen markets.”
However, the report noted that several of the platforms have produced good year-on-year growth that has helped Fintech Ventures increase its valuations of the businesses, largely due to successful third-party fundraisings.
“Whilst investment risk related to this portfolio will remain an ongoing feature we hope to see an increase in successful third-party equity raises in the foreseeable future with several being considered in 2018,” it added.
The report said that the risk is mitigated by Fintech Ventures taking a seat on most investee company boards so it can monitor progress and it also has a right or refusal for all new funding rounds.
Overall the value of the Fintech Ventures portfolio increased 181 per cent to £29.6m.
Alternative finance aggregator Funding Options and peer-to-peer bonds platform UK Bond Network are among Fintech Ventures’ investments, although these firms have not specifically been flagged as high risk by the company.
GLI Finance spent most of 2017 overhauling its business which saw the creation of Sancus BMS to manage and rename the Platform Black and Funding Knight P2P brands.
Sancus Finance, formerly Platform Black, and Sancus Funding, the new name for Funding Knight, will later be merged into a single Sancus UK brand.