A brief update on a rare piece of inter-platform activity, as iwoca turns to one of the UK’s more unique P2P players in an effort to raise money.
The credit facilities specialist iwoca is raising £1m through the UK Bond Network platform. iwoca raised $20m last week in a Series B round led by German VC firm Acton Capital Partners, which to a certain extent de-risks this latest bond issue as an investment opportunity. The £1m bond is being sought in order to expand Iwoca’s lending operations (and to refinance existing short term bonds as they mature).
The £1m bond will pay 9% gross per annum on a quarterly basis, over a 360 day term. Principal repayment will occur at maturity. The iwoca bond is secured against a pool of the platform’s loans, which must be maintained at a certain level (in terms of performing loans within the pool) in order to provide the agreed to level of coverage. The £1m auction begins at 9am BST on Monday next week.
Past examples of cross-platform pollination have typically involved an equity crowdfunding round. Assetz Capital, for example, recently raised around £3m through the Seedrs platform. Seedrs has also hosted rounds for Trillion Fund, Landbay, CrowdLords, CrowdCanDo and PledgeSports. Seedrs will soon attempt to raise £2.5m on the platform for itself, as a top-up to a recent £7.5m Series A round, which was led by the acclaimed fund manager Neil Woodford.
iwoca’s decision to borrow from UK Bond Network may well be the first instance of a platform raising debt capital through another platform.
So what’s iwoca’s logic here? We know that the $20m in equity finance that was raised by the platform last week will be at least partially used to issue an additional $150m of loans across the UK, Germany, Poland and Spain. But that $20m will also be used for the purpose of platform improvement. iwoca sources have suggested that a portion of the Series B money will be used to ameliorate the platform’s technology. So for what purpose has the extra £1m been raised?
iwoca – a balance sheet lender – may simply be looking to diversify its capital supply. And if ever there were a time to test out UKBN as a capital source, now is the time, as the platform’s private investors will likely be heartened by iwoca’s recent fundraise.
We’ll keep an eye on the success of the auction.
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.