Growth Street restricts investor fund access as it declares liquidity event
Growth Street has initiated a liquidity event on its platform, stopping peer-to-peer investors from accessing invested funds.
The business lender said this was due to a larger than usual volume of money not being reinvested amid coronavirus uncertainty, making it harder to fund withdrawal requests.
The stoppage, which can last for up to 90 days, means investor money is automatically reinvested, outstanding lend orders can’t be cancelled and users can only withdraw funds from their holding account.
Growth Street said this was not due to any issues with its loanbook but said it has been monitoring its portfolio.
It is understood that this may mean calling in some loans early.
Read more: Growth Street reduces loan sizes
“We have made significant progress in managing down and off-boarding GrowthLine borrowers that no longer fit our improved credit risk and industry concentration appetite,” the platform said in an update to investors.
“We have implemented robust credit breach monitors to evaluate the on-going performance of our borrowers, which enables us to react much more quickly to any potentially adverse stumbling blocks.”
The platform said the liquidity event has been driven by the “unprecedented impact” that the coronavirus has had.
It will end once normal market conditions are resumed, which Growth Street defines as “an adequate supply of money available on the platform to fund all drawdown requests and automated rollovers.”
Kim Goetzke, chief operations officer at Growth Street, said this decision has not been taken lightly.
“Though this decision was difficult, we are confident that it is the right decision to protect both our investors and our borrowers across the country,” Goetzke said.
“In order to ensure the stability of our portfolio, we are constantly and diligently monitoring the risk exposure of every single business on our loan book with our industry-leading credit assessment technology.
“Even before the outbreak of cornavirus earlier this year, we had already undertaken a process of ‘rebalancing’ our portfolio, and so while we face a challenge in overcoming the risks associated with this current economic climate, we are well prepared to overcome them in the weeks and months to come.”
The peer-to-peer business lender announced a restructure and layoffs in November 2019 which also included the departure of its founder and chief executive Greg Carter.
The platform has also made efforts to reduce risks by reducing its loan size from £2m to £1m and making it mandatory for any borrower applying for a Growth Street loan to connect their accounting data via Open Banking or cloud accounting to their dashboard.
