The first takeover of an alternative finance platform by a traditional financial services company is complete.
Peer-to-business lender Funding Empire has sold a majority stake to Paratus AMC – a residential mortgage servicer and lender. Paratus holds around £2.6bn in assets under management, which equates to roughly 27,000 accounts. The company, which also employs 115 people, now holds a 76% stake in the SME lending platform Funding Empire.
Headquartered in Cardiff, Funding Empire currently stands as Wales’ sole P2P outfit. The little-known platform specialises in SME loans. In Funding Circle-like fashion, Funding Empire branched out into the secured lending space in March of this year through a partnership with The Business Lending Exchange (BLX). BLX is instrumental to the delivery of this latest product. The company is responsible for both origination and credit assessment duties.
Our thinking is that Funding Empire has flown rather under the radar by design. The comments of Hans Geberbauer, CEO of the platform’s newly acquired majority shareholder Paratus AMC, seems to support the notion that Funding Empire has to date prioritised sustainability over rapid growth:
“We are delighted to have Parag and his team on board. They have built an excellent platform. In the fast moving P2P lending environment, they have resisted the temptation to take short cuts and built out Funding Empire’s business with great care. Combined with our strong balance sheet, mature back office and proven ability in managing secured assets on a large scale, this is a great opportunity to create a market leading business in the dynamic P2P lending market.”
Mr. Geberbauer has also joined the Funding Empire Board as CEO of the company.
Funding Empire has lent a cumulative total of just c. £210k to date. Will we see volumes kick upwards now that Paratus is involved? The aforementioned Parag Patel, MD of Funding Empire, offered his take:
“We are delighted to welcome Paratus AMC as a partner and majority shareholder. Their team, mature back office functions, strong balance sheet and proven ability in managing secured assets on a large scale presents us with a unique opportunity to create a market leading business in the dynamic P2P lending market. With the backing of Paratus AMC, we are now best placed to accelerate the development of Funding Empire and build on the solid foundation the team has worked relentlessly to create over the past few years. We are currently working on the launch of some new and exciting products without compromising our reputation for taking a very thorough, transparent and customer-centric approach to doing business.”
This is the first time that a takeover of this kind has been orchestrated within the UK's flourishing alternative finance space. RateSetter assumed control of the loan book of early-stage student lender GraduRates in December 2014. We identified the move as the first flicker of market consolidation. GraduRates quietly folded, and RateSetter took on responsibility for ensuring that its loan contracts were honoured.
The Funding Empire takeover is very different in character. The brand is still very much alive, and appears to be poised for a rapid expansion phase. We’ll keep a close eye on how the situation develops.
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.