The ascendant secured lending platform Wellesley & Co. has broken its own record en route to funding the largest loan in peer-to-peer lending history.
The previous record loan size within the peer-to-peer industry was £8.3m, set by Wellesley back in April. The rapidly growing platform has now outdone itself – notching a staggering £10.8m property loan. The mammoth loan is secured against Burwalls – a historic mansion situated alongside the Clifton Suspension Bridge and the Avon Gorge in Bristol. The money will be used by the property developer Kersfield in order to purchase and renovate the 142 year old building and grounds to create five new apartments, six build houses and a converted lodge.
Graham Wellesley, Chairman and Co-Founder of the platform, commented:
“The completion of this loan is a fantastic achievement, not just for the Wellesley team but also those investors who have supported the business since our launch last November. To be able to break the record we set earlier this year demonstrates our phenomenal growth and we’re delighted to have been named market leader in terms of monthly cumulative origination volumes.”
“It’s been a landmark month for the business not only in terms of completing this loan but also following the launch of our mini-bond and the start of our national TV advertising campaign. We’re excited about the opportunities we see in the market as the peer-to-peer industry continues to cement itself as a part of the mainstream financial services. We look forward to seeing further growth and being able to fill a vital gap in financing whilst offering investors access to competitive interest rates secured against tangible and stable assets.”
According to AltFi Data, Wellesley has now originated £73,798,838 of loans since its inception – secured against assets worth £116m. The growth rate for the platform over the past 12 months is astronomical. Wellesley recently posted the most productive month on record within the UK peer-to-peer industry, lending over £26.2m in July.
If you were to take Wellesley out of the picture, the largest ever peer-to-peer loan would be a £4.12m deal funded by LendInvest in January 2014. So how is Wellesley able to fund such monster loan sizes through the platform? Clearly a large part of the picture is that Wellesley has its own funds – with which it underwrites every deal that you see on platform, before then syndicating a percentage of each loan back to its private investor base. This structural feature not only boosts the platform’s lending capacity, it also provides a skin-in-the-game element that is otherwise largely absent from the UK peer-to-peer lending arena.
The question is this: what proportion of this latest £10.8m has been (or will be) syndicated to the crowd? Wellesley automatically spreads all capital on the platform across its loan book on a volume-weighted basis. This proportionate re-allocation of funds occurs weekly. Fresh investor capital is spread across every loan, both new and existing, thus continually driving down Wellelsley’s involvement in each deal. Wellesley’s stake in every loan (and this will in time include today’s record-breaker) ultimately diminishes to somewhere between 5% and 10%.
Massive individual loans within the peer-to-peer sphere are bound to make the headlines, but astute observers may receive the news with a touch of caution. The £10.8m deal makes up 14.63% of Wellesley’s total lending, and some investors may be concerned that they’ll be getting too much exposure to the giant loan – thus concentrating their risk in an unsuitable manner. Certainly such qualms are not to be dismissed out of hand. But offsetting the over-exposure risk are a number of factors. Wellesley deals only in secured loans and boasts about a 64% LTV ratio across all lending, and the skin-in-the-game element means that Wellesley share all the same risks as its private investor base. Finally, the platform also has a provision fund which is currently worth £524,193 – although not all lenders are eligible to dip into this pot should an unrecoverable default occur.
The UK's oldest and best-loved conference for fintech and alternative finance insiders returns for its sixth iteration at etc.venues. We'll showcase the best of the UK's digital banking, online lending and digital wealth sectors through a series of uniquely in-depth discussions and presentations. Open Banking will be in full flight, just over a year on from its launch, and will be a central theme at the event.