The marketplace lending-focused fund space is becoming increasingly competitive.
On the same day that the Marshal Wace-backed P2PGI announced plans to raise yet more funding, a newcomer by the name of Rozes Invest has entered into the institutional fray. Rozes Invest will reportedly target Europe’s marketplace lenders, and will adopt a fairly broad scope in terms of target product type. Anna Irrera and Vivek Ahuja of Financial News suggest that Rozes’ investments will include unsecured personal loans, SME loans, property-backed loans and invoice financing.
The new fund has been founded by the trio of Stephan Wilcke, Michael Carter and Matteo Sotti. Mr. Wilcke formerly served as head of European financial services at the private equity firm Apax Partners. He also ran the UK Treasury’s Asset Protection Agency between 2009 and 2012, in the aftermath of the financial crisis. Mr. Carter most recently held the position of co-head of RBC Capital Markets’ financial institutions group. Matteo Sotti was a partner at Renshaw Bay, an investment firm set up by former JP Morgan man Bill Winters.
Mr. Wilcke commented on the launch:
“We found that we had a lot of our own personal money on these platforms and we were getting good returns so we thought that there was actually a business in this, and that we could do it for other people as well.”
“We are concentrating on Europe as there are a lot of people focusing on the US, and we are European specialists with relevant backgrounds, which gives us a competitive advantage here.”
Rozes’ primary competition will come in the form of established investment vehicles P2PGI and Victory Park Capital’s Specialty Lending Investments, both of which are traded on the London Stock Exchange. Between them, these funds have raised £650m of firepower, the bulk of which has already been deployed within the marketplace lending arena. As mentioned above, P2PGI is now considering another share issue.
The challenge for Rozes will be to wrestle high quality loans away from the existing players. AltFi Data recently portrayed the state of institutional involvement in the loan portfolios of Funding Circle, Zopa and RateSetter – the UK’s largest online lending platforms. There’s good and bad news for Rozes. On the one hand, the numbers show that at least 27% of lending volumes on “the big three” over the course of April came from institutional sources. Clearly the platforms are becoming increasingly comfortable with the idea of selling loans to the likes of Rozes, but on the other hand there is already a healthy amount of institutional competition for the available loans.
But Mr. Wilcke sees a significant (and growing) demand for what Rozes Invest will bring to the market:
"The evolution [of the sector] is going to be similar to what happened in the US. There will always be retail investors on the platforms, but for the platforms to really grow and become very big, you will need institutional money, and that will come in various forms: securitisation, investment trusts, hedge funds, banks investing directly. We have quite a bit of expertise so we can invest for people who do not want to do it themselves.”
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.