Assetz Capital – the ascendant peer-to-business lender that has hardly paused for breath since the get-go in 2015 – has now unveiled an opportunity for private investors to share in the platform’s growth.
The platform has just launched a minimum £2m round on Seedrs – which is part 1 of a broader funding round that will ultimately see up to £6m raised. The campaign was already 28% full just minutes after opening. Assetz has indicated that it may accept up to a further £2m in overfunding via the Seedrs platform, subject to demand. The remaining balance will be sourced from institutional investors. The Assetz campaign will take the form of a convertible equity opportunity. In essence, investors are offered the chance to acquire a slice of the Assetz platform today – but at a valuation that is not set until the final institutional investor values the company and invests itself.
The institutional investors will settle on a fair valuation for the platform – after having of course conducted their own thorough due diligence process. The crowd of private investors that have invested through the Seedrs issue (providing that it fills, of course) will secure a 10% discount on whatever subsequent valuation is settled upon. The institutional injection is expected to be concluded several months after the Seedrs fundraise. Should the institutional arrangement take longer to finalize, the percentage discount on offer to the crowd will ameliorate.
Investors in the Assetz round will receive ordinary shares – in other words, shares with voting and dividend rights akin to those that will be held by the platform’s as yet undisclosed institutional investors. The round also carries the potential for EIS tax relief as this status is being reapplied for and was previously HMRC confirmed when the company set up.
Assetz Capital has indicated that the fundraise has already garnered a lot of attention from the high net worth portion of the platform’s existing base of investors. Based on suggested demand, the £2m initial target could be reached quickly, at which point a greater share of the overall fund raise could be allocated to the crowd.
Assetz’ management team also pointed to that fact that this will almost certainly be the last time that private investors will have the opportunity to acquire equity in the platform until its IPO – whenever that may be. The campaign certainly represents an uncommon opportunity. Firstly, it’s not often that established alternative finance platforms offer up equity to “the crowd”. Indeed, only two examples spring to mind:
The other key point, of course, is that this is the first time that an established platform has made equity widely available since Lending Club’s landmark IPO in December. Seed stage VC investors in the Lending Club platform saw their investments balloon by an astronomical multiple after having initially channeled money into the platform back in 2007 – and that will almost certainly play on the minds of investors interested in the Assetz fundraise.
The Assetz platform has been making all sorts of moves over the past couple of months. From a formal referrals tie up with RBS, to a newly unveiled invoice finance product, to a £150m investment commitment from Victory Park Capital – it’s been all systems go of late and 2015 looks set to be a year of strong growth for the platform.
Stuart Law, Co-Founder and CEO of the platform, offered his take on the opportunity at hand:
“We have been receiving a lot of requests from our lender base to participate in any possible equity opportunity for quite some time. We definitely wanted to reward our loyal investors who have supported us and helped make us one of the fastest growing marketplaces in the world and this crowd funding campaign is the result. We have therefore reserved a large slice of our Series A fund raise for the crowd. Any future fund raises may only be able to go to institutions so the next public chance to invest could be at an IPO at much higher valuations. And of course our very strong economics mean we may not even seek any further equity rounds. We are also seeing good competition for the balance of this Series A from institutions. Our team intends to deliver fantastic returns for all of our investors, whether lenders through the platform or investors in our equity.”
“We have firmly established ourselves as one of the top business loan marketplace platforms in the UK and our growth rate is based on our strong credit team and processes and the realisable security that we take on the loans we make. The funding lines that we are contracting should reach £1 billion by the end of 2015 and this capital attracts a lot of borrowers that in turn brings down our cost of customer acquisition.”
“We chose Seedrs as a key platform in the UK market to work with, after doing our due diligence on the sector, and are also pleased to be supporting their growth too. We believe crowd funded equity will also come of age this year, just as Peer to Peer lending did last year and we are one of a few key crowd funding campaigns early this year that move things on from a start-up focus to fund raising for more established and future large-scale businesses.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.