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The Liberum AltFi Index: A New Form of AltFinance Emerges




By Ryan Weeks on 5th March 2014


The latest edition of the Liberum AltFi Index has landed! The month of February has been one of sustained growth for the industry. New combatants continue to pile into our index, and we’re seeing a number of trends take shape. These are our main takeaways:

 

  • Sector-wide growth rate continues to creep upwards
  • An exciting new entrant into the Alternative Finance bracket emerges
  • An especially strong month for Wellesley & Co.

 

The Index’s original six participating platforms produced a February growth rate of 7.70% between them – up from 7.06% the previous month. Among our more recent entrants, sector expansion remained relatively constant: 8.19% in January, 8.22% in February. It will be a few weeks before we can determine industry growth rates with the newest of our newcomers in mind (i.e., Clifton, Seedrs). These sector-wide growth rates are a simple reminder that AltFinance platforms are edging further into the mainstream with each passing month.

 

We typically divide alternative finance into three broad categories: peer-to-peer lending, crowdfunding, and invoice trading. It may be time to add a fourth. Pension-led funding (PLF) is a rapidly growing source of unconventionally sourced finance for businesses. The unique service is being provided by Clifton Asset Management, and has to date supplied a whopping £210.5 million for UK companies. This is enough to establish PLF as an alternative finance bracket unto itself – and a significant one at that. Adam Tavener, Chairman of Clifton Asset Management, provided an explanation of the service:

 

“Pension-led funding uses directors’ personal, existing pension funds to raise capital for their business. It provides finance without having to give a personal guarantee to a lender and can provide protection for business assets held within the pension scheme.

 

Funds are deployed from existing pensions on an approved commercial basis and repaid to the scheme with interest at a commercial rate. Typically this is achieved by the pension making a loan to, or purchasing an asset from, the business, with it subsequently making loan/ lease payments back.

 

This methodology utilises value in commercially owned assets including intellectual property to secure these funds. All funding is repaid via loan payments over a fixed term or lease payments as agreed by the trustees and at an agreed commercial rate, providing a chance for real growth for the pension scheme.”

 

Finally, Wellesley & Co. have well and truly flown out of the gates. After an impressive few months since launching, the p2p lending platform has now leaped from a loans funded figure of roughly £4.5m on February 1st, up to just shy of £8m today! Such a marked increase is testament to the service provided by the platform, which we believe distinguishes itself through being able to offer a superior level of investor protection. Graham Wellesley, Chairman and Joint CEO of Wellesley & Co., commented on the good news:

 

“We are focusing on the middle and lower end of the borrowing market (£1m-£10m) and the market has confirmed our suspicions that this area is underserviced.

 

Being able to quickly process and commit to lending opportunities, our clients find us a reliable source of capital.

 

Rates of Growth we would expect to continue and our target loan book is £100m in the short to medium term”.

 

You can view this month’s stats for yourself below:

 

 

At February 1st

At March 1st

Zopa

459,875,710

479,400,900

 

4.80%

4.25%

Ratesetter

167,015,622

182,311,494

 

10.80%

9.16%

Funding Circle

211,100,520

231,582,680

 

6.46%

9.70%

ThinCats

53,870,000

58,382,000

 

11.38%

8.38%

Market Invoice

112,844,477

130,000,000

 

10.25%

15.20%

Rebuildingsociety

3,689,969

4,394,019

 

10.84%

19.08%

Total

1,008,396,298

1,086,071,093

 

7.06%

7.70%

CrowdCube

17,574,970

19,856,520

 

6.59%

12.98%

Platform Black

37,980,377

41,586,832

 

7.18%

9.50%

Assetz Capital

14,267,335

17,202,495

 

22.81%

20.57%

Wellesley & Co.

4,553,500

7,919,606

 

14.83%

73.92%

FundingKnight

3,868,000

4,378,000

 

12.02%

13.19%

LendInvest

26,395,451

27,476,600

 

65.90%

4.10%

Total

1,113,035,931

1,204,491,146

 

8.19%

8.22%

Clifton Asset Management

 

210,550,002

     

Seedrs

 

6,100,000

     

Total

 

1,421,141,148

 

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