ArchOver completes record breaking loan

March 10th, 2016
ArchOver

ArchOver has successfully raised a record breaking £2.3million loan to Scottish based Duradiamond Healthcare.

Here is the full press release:

ArchOver via its crowdlending platform has successfully raised £2.3m to support the growth and development of Perth-based occupational healthcare company Duradiamond Healthcare. It is believed to be the largest non-property related working capital facility ever raised by any platform anywhere in the world.

Commenting on the loan, ArchOver CEO Angus Dent said: "We are obviously delighted that we have been able to assist Duradiamond Healthcare, an exceptionally fine Scottish company that we are convinced is destined for greater things. However, this is also ArchOver's largest loan by far and so we are equally pleased for ArchOver and its growing band of loyal lenders. Everyone involved has worked very hard to bring this campaign to a successful conclusion."

"Above all, this makes a massive statement about the effectiveness of crowdlending in the modern financial marketplace. We have demonstrated that we have the systems, structure and capacity to offer a genuine alternative to the banks when it comes to providing flexible finance to young growth companies. It is a good outcome for all concerned."

The loan replaces a facility provided by RBS of £1.8m and increases the working capital available to the company. Duradiamond Healthcare needs additional working capital to service its growing business. As a result of the four new contracts, Duradiamond Healthcare is expecting its turnover to increase by almost a fifth to £14m this year, rising to £17m and £21m in 2017 and 2018 respectively.

Chief Executive Dr Chris Pugh said: "We are delighted with this new form of finance which will enable us to fulfil our growth opportunities across the UK."

The deal was introduced by Neil Davidson, founder and MD of Alderburn Finance Solutions based in Edinburgh.

Zopa launch new products

February 17th, 2016
Zopa

Zopa had announced that it is launching some new products and retiring the old products in March. The main differences are that lenders will no longer able to select loan term, but they can select if they wish to benefit from a higher return with the additional risk of being outside Zopa's safeguard mechanism. Zopa has hinted at this possible move during discussions at LendIt Europe in October 2015.

Zopa launched their previous safeguard products in May 2013, and finally closed their non-safeguard products in July 2013.

So how will these changes affect lenders? Zopa attempts to answer this in one of their FAQ's:

Currently we offer a 3.8% rate for 1, 2 and 3 year loans and a 5.0% rate for 4 and 5 year loans. The Zopa Classic rate will be a blend of these two markets.

Due to the nature of our loans, where customers can pay back early for no extra fee, the time it takes for money to be returned to lenders in the short and long markets does not vary greatly. Our five-year loans tend to be repaid in two years, with our three-year loans being re-paid on average in 1.3 years.

So if you are currently lending in up to three year loans, then your predicted rate will likely be slightly higher in Zopa Classic, but some of your loans will be repaid over a longer period. If you are currently lending in up to five year loans, then your predicted rate in Zopa Classic may be slightly lower, but some of your loans will repay sooner.

Assuming funds are gradually transferred to "Zopa Classic", lenders currently in the shorter market may benefit by an increase of around 0.5% AER in their returns, although their funds would take longer to be repaid. Conversely lenders currently in the longer market may see a reduction of around 0.5% AER in their returns, but their funds would be repaid sooner.

One of the products "Zopa Plus" has a 2% AER premium on "Zopa Classic" but lenders would no longer be covered by the safeguard fund. Lenders should therefore expect bad debts which will erode their return, as with any other non-provision fund peer-to-peer lending product. With defaults in Zopa in 2014 at 1.15% in the lifetime of a loan, a 2% annual equivalent rate bonus would seem beneficial. However this market is being opened to D and E grade borrowers, so we should expect bad debt to be higher than previous years. This product will have a higher minimum lending amount to ensure lenders are sufficiently diversified.

Here is the full statement from Zopa:

Today, we are very excited to announce the next generation of Zopa lending products!

Over the past months we've been listening to our lenders about what they want from their lending products, and what matters most when it comes to lending through our platform. You've told us ease of access and the ability to take on more risk are key to offering a broader, more appealing product set. Based on your feedback, we'll soon offer more choice and providing benefits from recent regulatory changes, particularly around the tax status of peer-to-peer interest.

In mid March, we'll be replacing our existing lender products with three new ones: Zopa Classic, Zopa Access, and Zopa Plus. Together, these products will offer much more choice and flexibility to both existing and new Zopa lenders. As with all peer-to-peer lending, your investments are not covered by the Financial Services Compensation Scheme (FSCS), so your capital is at risk. If you wish to access your money by selling your loans, this is dependent on other lenders being available to purchase those loans.

We are sharing indicative rates today, and exact rates will be announced on 1st March. As with our existing rates, the new product rates will vary with the market, so if borrower interest rates go up, the rates on your new loans will go up too and vice-versa.

The New Zopa Products

Zopa Classic (4-5%) - Safeguard lending

Zopa Classic will give customers the security of Safeguard and access to their money at any time, subject to a 1% fee. This product is most similar to what our lenders have today, however what's new is that it combines 1-5 year loan terms.

Zopa Access (3-4%) - Safeguard lending with fee free easy access

For customers who value easy access to their money, we've created Zopa Access, which has Safeguard but which has no access fee and a slightly lower expected return.

Zopa Plus (6 -7%) - Non-Safeguard lending, some added risk with higher returns

For customers who are willing to accept more risk for higher returns, we've created Zopa Plus. Over the last year we have been testing the performance of D and E rated borrowers with our institutional lenders, and based on these tests, we would like to offer loans with D and E rated customers to all lenders. With the introduction of Zopa Plus, customers can lend across A*-E risk markets. Loans in Zopa Plus are not Safeguarded, and so it will suit customers who don't require this additional security as they are comfortable lending their money via Zopa's diversification model. Predicted rates of return will be higher but will come with some additional risk.

When the new products launch, what will happen to customers' loans that are in the short and long products?

If you're a current Zopa lender, then as we retire the existing short and long products, your repayments will cycle into the new Zopa Classic product. So the rates will stay the same on your existing loans, but as they get repaid, the repayments will be used to buy new loans within the Zopa Classic product.

How will customers be able to have multiple products? How can they be funded?

Customers will be able to have multiple lending products with us - you can have an Access, Classic and Plus product - however only one can be selected for new funds at any given time.

If you are an existing customer and you wish to move your existing loans from Zopa Classic into one of the other new products, you can choose to turn off re-lending and allow repayments to collect within the holding account and then allocate those funds to a new product. Alternatively, you may sell your loans and purchase new ones within a new product.

For answers to more of your questions, please visit our FAQs page.

Folk2Folk share offer

February 15th, 2016
Folk2Folk

Another peer-to-peer company is looking to raise equity to fund expanding their business. Folk2Folk, who recently announced they were expanding nationwide by creating a national legal panel, are looking to raise £3.5million in equity.  This values the business ar £16million.  The share offering will only be open to certified or self-certified high net worth or sophisticated investors.

Here is the full statement:

Folk2Folk, a P2P lender to rural businesses, has engaged Asset Match to handle a secondary placing of 7,600 founder shares and a primary fundraise of £1,500,000. The two transactions together will total approximately £3,500,000. EIS relief will be available on the offering of new shares.

  • The total amount being offered is £3,500,000 of combined founder and new shares
  • Investors will receive a split of approximately 57% founder shares and 43% new shares (however, should demand allow, investors may receive a higher proportion of new shares to founder shares)
  • EIS relief will be available on the portion of the offering represented by new shares
  • The offer price is £263 per share
  • Pre-money valuation is c. £16,000,000 which is the post-money valuation from when the company raised £1,000,000 last year
  • The founders have committed not to sell further shares for a period of at least one year after completion of this placing and will still own more than 50% of the enlarged share capital.
  • Folk2Folk has committed to making its shares tradeable on Asset Match’s secondary market in the future (most likely after 12 months)
  • Folk2Folk had arranged loans of over £83,000,000 at the end of January 2016, an increase of 175% over the previous 12 months
  • Folk2Folk is re-setting the values around lending, and focusses on fairness, ease and a sense of community
  • New bespoke technology platform which has been developed over the last 9 months is due to be installed by the end of the first quarter bringing the opportunity to scale and increase productivity

All necessary documents – the Articles of Association, Business Summary, Bios and Application Form – are available on our platform. To access the page, first register (if you have not already) and then request access to the BookBuild page by emailing Asset Match.

Background:

Folk2Folk was founded in 2012 by Mark Parnall and Louis Mathers and was born out of the local law firm, Parnalls in Launceston. Parnalls had for many years run a building society agency business for Bradford and Bingley (later Santander), together with a separate private mortgage business and Folk2Folk is the successor to these businesses. Since March 2015, Folk2Folk has been headed by Jane Dumeresque, a qualified chartered accountant and an experienced financial services professional with executive and non-executive director experience.

In September 2015 the company completed a £1,000,000 EIS fundraise at a pre-money valuation of £15,000,000 and since then, as indicated above, the company’s loan book has continued to grow rapidly.

Other key points:

  • Folk2Folk is purely an arranger; it does not take risk onto its balance sheet
  • They charge a 2% arrangement fee and 1% per annum service fee on arranged loans
  • They are a unique hybrid of a FinTech P2P platform and a regional high street presence
  • Recently launched a panel of local law firms to facilitate growth into other rural regions of the UK
  • No presence, and no plans to develop, a city centre business
  • An attractive branding suited to expanding overseas

Investment:

This opportunity is only available to certified or self-certified high net worth or sophisticated investors. The minimum investment is £20,000.

The Folk2Folk offering has gone live on Asset Match this morning and you can follow the subscription process via our BookBuild page for Folk2Folk once you have been given access.

We will be holding an Investor Presentation with the senior management of Folk2Folk at the Institute of Chartered Accountants Hall, Moorgate Place on Tuesday 1st March at 17:30. Please visit the following link to reserve a place – Investor Presentation.

Money&Co pipeline

February 11th, 2016
Money&Co

Money&Co have announced that have a pipeline of loans in excess of £4million over the next quarter.  This was announced in an email sent to lenders providing an update on their business.  Money&Co also stated that they they are to offer asset backed loans in order to broaden their offering.

Here is the full email:

We are conscious that 2016 has started without an auction on the site, which is disappointing, and so the purpose of this message is to give you an update regarding the strength of our transaction pipeline going forward.

It is important to emphasise that Money&Co. consciously differentiates itself from other peer-to-peer business lenders by employing a more forensic approach to its due diligence.  The downside of this is that lead times for a transaction are typically longer than for other sites, but lenders should take comfort from the knowledge that a more rigorous appraisal of potential borrowers is undertaken, which is reflected in the quality of the current loan book.  In addition, we have established a reputation with borrower introducers as a specialist in acquisition financing in its various forms.  Such deals typically require more analysis than a request for a conventional corporate loan and are likely to involve delays because of the involvement of a wider set of parties.  In our view, it is worth being patient in order to gain participation in these deals.

We are currently actively working on transactions with an aggregate value in excess of £4 million, including two deals with a total value of £2.7 million, for which credit applications are being prepared now with funding required in April/May.  We are also hoping to bring two smaller transactions to the site in the coming weeks.  Finally, we have been selected by a further three borrowers who are seeking exclusivity on their part in the hope of concluding acquisitions over the next eight weeks.  These transactions represent a further potential funding requirement of £1.8 million.

Against this background, and in order to grow our transaction flow going forward, we are increasing the size of the Credit Team and also extending our product range to include asset-backed lending in order to broaden our offering to lenders.  We expect the number of auctions to increase dramatically on the site in the coming months and we hope that you will continue to lend through Money&Co.

Thank you for lending with Money&Co.

Folk2Folk expanding nationwide

January 25th, 2016
Folk2Folk

South West based traditional business lender Folk2Folk are looking to expand nationwide by creating a national legal panel.  This is to support Folk2Folk's local and traditional lending model.

Here is the full press release:

Today, Folk2Folk, a leading Peer-to-Peer lender (P2P) to business, announced plans to team up with the legal profession with its launch of a national Legal Panel.  The Legal Panel will form a national network of law firms to support the company’s local secured lending model as a central part of its national expansion programme.

Folk2Folk offers a simple and approachable way for people in business to access interest only funds and a unique opportunity for people to lend within their local area whilst benefitting from a great interest rate.  This model has helped mobilise money in the countryside and reenergised many small businesses that would have otherwise lacked the necessary investment to develop. Rather than using the judgement criteria of banks, Folk2Folk takes a different and holistic view of the Borrower assessing each case individually.  As businesses continue to struggle to secure finance from the banks, Folk2Folkprovides a refreshing and friendly alternative.

Built upon traditional values, the company has enjoyed huge success since its inception in 2013, growing to become a leading lender to rural business and introducing more than £81 million of lending from local investment. Cumulative volume of lending increased 100% in 2015 from £40 million to £80 million. The company has supported businesses and facilitated millions of pounds of investment by introducing lenders to borrowers in various industries. The success in the South West is an indication of the strong demand for a different and people focused service such as Folk2Folk.

Fundamental to the success of Folk2Folk is the company’s focus on lending within communities - helping local money work for local people.  The creation of a national Legal Panel will enable Folk2Folk to expand nationally while maintaining its traditional values and local focus through a network of local law firms. Panel law firms will carry out the legal work necessary to complete loans in their locality and provide Folk2Folk with local knowledge as part of the security process.

The Legal Panel is a fundamental part of Folk2Folk’s wider national expansion strategy to develop an extensive and wide reaching group of professional networks; focusing on regions where demand is strongest, and extending its physical presence through an increased number of High Street branches.

The lending Folk2Folk has introduced to date has helped to deliver a broad range of projects including farm diversification, property development, equestrian centres, wedding venues, and golf courses. Lenders receive competitive returns on their investment and the security of a first mortgage, whilst at the same time supporting their local community.

Folk2Folk’s Chief Executive Officer, Jane Dumeresque, said: “Local lawyers are a crucial part of the effective workings of Folk2Folk’s business model.  As we expand nationally, we are committed to maintaining our unique local focus.  So at a time when other Legal Panels are being disbanded, we are shining the spotlight on local law firms and actively seeking to recruit them to our Legal Panel.  Local community knowledge and expertise is paramount to the success we have seen so far and we are looking forward to teaming up with local law firms to continue that success across the country.”

Folk2Folk is currently recruiting law firms to join the Panel and is seeing strong interest from the legal profession.  Folk2Folk expect many more firms from across the country to sign up to the Legal Panel over the coming months.