INSTITUTIONS have been highly active in the peer-to-peer lending space this year, in the form of both funding lines and equity investment.
Funding lines have helped P2P platforms to boost their lending volumes, while equity funding has been used by P2P firms to expand their teams, improve their processes and grow their product ranges.
A wide variety of institutions are backing the P2P sector in one way or another, including City firms, pension funds and family offices.
Earlier this month, US-based investment bank Goldman Sachs made a £200m commitment to fund loans originated by P2P lender Lendable. Just a few weeks earlier, property lender Landbay announced that it had secured a massive £1bn funding line from an unnamed institutional investor to boost its mortgage lending.
In March, Assetz Capital announced that it expected to raise more than £110m through a series of partnerships and funding deals with European and UK-based institutions. The true value of Assetz’ 2019 institutional funds is believed to be much higher than £110m, as that figure does not include the unspecified amount which was invested through Germany’s Varengold Bank.
The P2P business lender has since gone on to launch a Luxembourg-based private fund, in order to attract more institutional money to scale up its lending.
Varengold Bank has also offered a funding line to MarketInvoice, worth £90m. Combined with a £45m funding agreement with Banco BNI Europa, that brings MarketInvoices’s 2019 institutional total to £135m.
In the same month, property lender CrowdProperty announced that it had received a £100m funding line from an unnamed “major financial institution” to fund larger projects and originate more opportunities for retail investors.
In April, property P2P lender LendInvest secured a £200m funding line from HSBC UK, allowing it to make its first move into the residential mortgage lending space.
In May, Scottish lender LendingCrowd inked a funding deal worth £18.75m with the government-backed Scottish Investment Bank (SIB) and Dutch entrepreneurial bank NIBC. SIB had previously issued LendingCrowd with a £2.75m funding line in October 2016.
Meanwhile, property specialist CapitalRise secured £30m in institutional funding which will allow an unnamed “major financial institution” to fund loans alongside other investors and underwrite larger projects.
And just last month, sector leader Funding Circle won a €50m (£44.7m) funding line from Nordic lender Avida Finans AB to support small businesses in Germany and the Netherlands, where the P2P lender also operates.
A slew of other fundraising initiatives have brought almost £70m of institutional money into UK-based platforms since the start of the year.
Growth Street recently closed a £10m institutional funding round led by existing investors Merian Chrysalis Investment Company. The money will be used to improve the platform’s credit decision systems and expand its sales team.
Similarly, business lender LendingCrowd secured £2m from angel syndicate Equity Gap, the Scottish Investment Bank and other private investors in order to ramp up its sales and marketing activities.
But the biggest institutional beneficiary of the year to date has been MarketInvoice, which gained £26m in equity funding through a fundraise led by minority stakeholder Barclays and Santander’s InnoVentures funtech fund. In addition to this funding, credit fund Viola Credit also pledged a £30m debt facility to go towards business loans on the MarketInvoice platform.
With so much deal activity in the P2P sector already this year, it seems likely that institutional interest will continue to grow over the rest of 2019.