ASSETZ Capital is set to welcome at least £110m in institutional investments over the coming months as part of an ongoing expansion plan.
The peer-to-peer business lender is in the process of signing a £50m funding deal with a family office from mainland Europe and a separate £50m deal with a UK-based institution, as well as a £10m agreement with an unnamed credit fund.
This is in addition to its recently-announced funding partnership with German bank Varengold, which was confirmed earlier this week. The value of this partnership is yet to be revealed.
However, chief executive Stuart Law (pictured) has reassured retail investors that they will always have first pick of the platform’s loans, despite an expected influx of institutional cash.
He told Peer2Peer Finance News that the new institutional cash will sit alongside the retail funds on the platform, and the retail user experience will remain unchanged.
“We haven’t really changed our policy and purpose,” he explained. “The way that institutions are funding marketplace loans has changed.
“Some time ago, they all seemed to want higher risk and higher returns, but that has definitely gone away for most of them, or at least for the ones who are working with us.
“We’re seeing a growing number of institutions who are interested in investing in fractional loans. This introduces more cash into the marketplace and makes our investor accounts more fluid.
“So, it’s a very good thing to happen. The institutional capital can help us reach our full potential.”
In 2017, Law claimed that a reliance on institutional investment would force some platforms to take on more risk. However, he believes that the institutional market has changed since then.
“They did definitely want to push some platforms up the risk curve,” said Law.
“But we’re definitely not seeing that now. We have a growing number of institutions who are investing alongside retail lenders.”
Law added that the decision to accept more institutional cash was made in response to the platform’s “very active” aftermarket, which has surpassed £1bn in traded loan parts.
By adding institutional money, he claims, Assetz can deliver more liquidity and scale for its retail investors.
“Our policy remains the same,” said Law. “It’s still retail first. Retail can take as much as they want, and the institutions will fund the rest.”