Assetz Capital’s chief executive Stuart Law and director of investor relationships Martin Heelam, explain how Assetz became the biggest IFISA provider in the UK open to new investment during a particularly turbulent year
Assetz Capital is the largest peer-to-peer lending Innovative Finance ISA (IFISA) provider open to new investment in the UK for the tax year 2020/21, despite the many challenges of Covid-19.
Just over a year ago, the platform was grappling with a global economic shutdown, a spike in withdrawal requests, and a community of concerned borrowers.
It implemented a host of new measures designed to protect investors and help borrowers, and 12 months later chief executive Stuart Law (pictured) believes that the company is in prime position to be a “future winner”.
“We weren’t without challenges,” says Law.
“There weren’t many businesses that sailed through the pandemic without any turmoil. We had turmoil in adapting to the new environment, but we have adapted to it well, and quickly. I think people can see that we’re clearly one of the future winners.”
Although withdrawals slowed and stopped very abruptly in March 2020, Law had anticipated this type of scenario, although nobody could have predicted the precise timing.
As a result, the accounts “did exactly what our disclosures said they would do if normal market conditions ceased, which they did for a year,” he says.
“They became illiquid for a period, but continued to pay healthy returns to investors,” Law adds.
In fact, Assetz has continued to pay an average of approximately four per cent in interest (net of fees) to its investors over the course of the year.
“Whilst past performance does not guarantee future performance, we are pleased with the returns paid to investors during this difficult period and the overall management of the loan book,” says Law.
In response to the pandemic and the first national lockdown, Assetz paused new lending through its manual lending accounts and access accounts, added a temporary lender fee, and introduced a queue for investors seeking to withdraw their cash. This meant that lenders saw a slight reduction in their returns.
“Our target interest rates have come down, but that’s the right thing to do to then help bolster the provision fund,” he says.
“Rates are still healthy in a low-interest environment and that’s attracting people.”
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The current lender fee is to be lifted by June, and Law says that the withdrawal queue should also disappear within the coming months, with well over £100m of cash now delivered on withdrawals in the last year.
“We expect investors will see liquidity return, hopefully very soon into the new tax year,” Law says. “We’ve been through what has been a very testing time in a number of different ways.
“But what we have seen during the 12 months of Covid is that our IFISA and its returns have remained robust.”
Assetz has certainly benefitted from a surge of transfers from other IFISA providers this year, as many of the big lenders have paused their retail offerings indefinitely.
“We’ve seen a dramatic increase in transfers and new openings versus what we’ve seen over the previous year,” says Martin Heelam, director of investor relationships at Assetz Capital.
“The bulk of those transfers seem to be from other IFISA providers.”
With £100m of IFISA investments, Law is confident that Assetz can build on this success as it continues to scale its business.
Within the next few years, Assetz plans to initiate a public listing, and position itself as a real competitor to challenger banks, without actually becoming a bank itself. Funding around one in 12 of all small housebuilder new homes in the UK in 2018 and 2019 is “just the beginning”, says Law.