Growth Street backer Merian Chrysalis has halved the value of its investment in the peer-to-peer lender following two defaults at the platform.
An annual results update by the investment company showed it has invested £12.5m of capital in Growth Street in January 2019, made up of £5m in shares and a £7.5m loan note.
It said the investment was worth £6.1m as of September 2019 and the loan note was converted into preference shares earlier this month.
“Post period end, two loans that Growth Street had made fell into default,” the update said.
“Given the size of these loans, we have taken a prudent view of valuation while we work with other investors and management to implement a revised business plan.”
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Merian still seemed positive on the business.
“Growth Street has developed an innovative P2P product specifically targeted at UK small- and medium-sized enterprises (SMEs),” its update said.
“The firm’s proprietary technology platform integrates with a number of data sources to provide unmatched speed, flexibility and credit monitoring for SMEs.
“Growth Street reconciles accounting, bank and credit data on a daily basis, which enables it to streamline the credit decision process and provide ongoing credit monitoring and credit line adjustment. Its flagship business finance facility, GrowthLine, is a highly flexible revolving line of credit designed to replace and extend bank overdrafts and invoice financing.”
It comes as Growth Street announced a restructure and layoffs at the end of last year which also include the departure of its founder and chief executive Greg Carter.
The platform has also shifted to a digital-focused business model.