1.UK – P2P
Growth Business reports developments at IW Capital.
“IW Capital, the alternative investment house, plans to offer up to £200 million worth of debt funding to small business a year.
Crucially, IW Capital is opening up its new debt fund to private investors, with a £10,000 entry point for individuals who want to lend to SMEs.
The financier entered the debt market a year ago and has lent £10 million to date, compared to £3 billion for OakNorth and £400 million for ThinCats.
Typically, it lends between £1-3 million to SMEs over a three-to-five-year period. Entrepreneurs pay around 9 per cent interest on the loan.
Luke Davis, CEO and founder of IW Capital, said: “Debt is the other end of our risk profile. It’s for companies typically that are 10 years or older and are growing both from a revenue and Ebitda point of view. The money could be used for management buyouts, buy-ins or to refinance.”
Next IW Capital plans to launch a £10 million debt fund, followed by a £20 million iteration.
Davis said: “We’re just building up our traction and internal processes, but there’s a lot of interesting companies out there. Banks aren’t interested in lending to the size of businesses we’re looking at. We’re growing quite quickly at the moment, both in terms of money we can deploy, and resources are bringing in.”
2. UK – P2P/IFISA
Your Money runs an overview of the risks and benefits of IFISA investing.
“Innovative Finance ISAs are a relatively new type of wrapper available through peer-to-peer (P2P) lending platforms.
This type of ISA lets P2P lenders enjoy tax-free returns as long as they don’t exceed the usual £20,000 ISA allowance.
With rates on offer as high as 6% or 7%, it’s easy to see why these products have caught the attention of long-suffering savers.
But it’s important to remember that rates are high because of the risks.
To re-cap, P2P lending platforms such as Zopa, Funding Circle and Ratesetter, match you the saver (or to be more accurate, the lender) with borrowers, which are either individuals, small businesses or both – depending on the platform.
However, you can also lend to property developers, wind farms or even more left-field sectors like pawnbroking.
The platform takes your money and allocates it to a range of different borrowers, with the aim of mitigating the risk of defaults.
Savers hope to get better rates than they would from banks and building societies, while borrowers aim to raise money for themselves or their business without having to go through the traditional bank route.
Over the last year, the amount of money saved in Innovative Finance ISAs – or IFISAs – has increased by over 700% with six times more people now saving in an IFISA, according to HMRC data.
The amount of money in IFISAs rose from £36m in 2016-17 to over £290m in 2017-18.
But it’s important for savers to fully understand the dangers before taking the plunge.
One of the main risks is your money is not protected by the Financial Services Compensation Scheme (FSCS) like it would be if you went for a traditional savings product. The FSCS entitles customers to compensation of up to £85,000 if an authorised financial services firm fails.
There’s also a risk you won’t get your money back or you could get it back later than expected. Although the different platforms have their own criteria for accepting individuals and/or firms to lend to, there’s no guarantee borrowers will be able to pay back the loans.
There is also the chance you may not get the advertised rate, for example if a single borrower fails to repay the money or if there are changes to macroeconomic conditions. However, most major platforms have provisions in place to protect savers.
If you’re comfortable with the risks, Andrew Hagger, an independent personal finance analyst from Moneycomms.co.uk, suggests the following checklist:
- Consider investing a small sum to start with to ensure you’re happy with how it all works.
- Check the provider website for details of the measures they take to protect your money. Most will have some sort of protection in the form of a provision fund.
- Check the minimum sum you can lend (it’s usually between £10 and £100 but some require £1,000).
- Find out the platform’s track record to date regarding defaults/losses. Look for actual figures rather than vague promises. RateSetter is an excellent example as it gives full details of its provision fund, including the amount set aside for defaults.
- Check if you are able to access your money if you need it in an emergency – some platforms operate a secondary market but check what this involves and if there are any charges.
3. UK – Equity
The Business Desk reports.
“Manchester-based Praetura Ventures says it is raising money for its first Enterprise Investment Scheme (EIS) fund. It says it is part of its mission to bridge the estimated £300m venture capital funding gap for scaling businesses in the North West of England. The company plans to raise £15m of EIS capital to fund around eight to 10 early-stage companies in the region. Praetura Ventures, formerly Praetura Capital, says it has a proven track record generating lucrative returns by backing early-stage businesses.”
4. UK – AltFi/Real Estate
Peer-to-Peer Finance News reports:
“ONE of Ireland’s largest alternative lenders has made its first foray into the residential mortgage market in a move to compete with the country’s big retail banks.
Finance Ireland has introduced its own residential mortgage products after buying the Pepper Money residential mortgage business in December, The Times reports.
Finance Ireland’s new mortgage products will see variable rates starting from 2.75 per cent for borrowers with a 50 per cent loan to value, and fixed rates from 2.55 per cent, undercutting average rates across the market. It will offer better rates to customers as their loan to value ratios drop.
Founder and chief executive Billy Kane said Finance Ireland is now a “substantial business” challenging the main banks across a number of sectors, including the residential mortgage market where he said there had been “too little competition for too long”.
5. International – FinTech
PR Underground carries a release.
“TurnKey Lender, a provider of intelligent lending automation, decision management, and risk mitigation solutions, announces the opening of a new office in the capital of Malaysia, Kuala Lumpur. Its main goal will be to physically represent TurnKey Lender and support the company’s operations in Asia.”