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UK Alternative Finance in 2015 - Records A Plenty in £2.8bn Year

By Sam Griffiths on 7th January 2016

The UK’s Alternative Finance Industry had a very productive festive season. December’s origination volume set a new industry record with the Liberum AltFi Volume Index tracking £283.3m in financing originated. This just bettered the previous high of £279.1m, set in September 2015, and represented a 73% increase in volume on December last year.

 

Funding Circle reported the highest origination volume with £54.3m lent, closely followed by RateSetter (£53.5m) and Zopa (£45.6m). None of the top five platforms set new highs. However, we did see record months posted by Funding Secure (£3.25m lent), Lendable (£1.05m), Proplend (£2.2m) and Landbay (£3.5m).

 

December’s strong performance rounded off a big year in terms of alternative finance origination volumes. £2.81bn of financing was originated by the UK industry in 2015, a 75.7% uplift on 2014. Of this £2.81bn, £2.68bn was debt financing – the remainder equity. 2015 has seen six new platforms enter the index, topping the minimum threshold for in clusion which currently stands just above £5m. However the vast majority of the volume growth has come from the established platforms. At the start of 2015, the largest amount that had been originated by any UK platform in a month was £35.1m. That record now stands at a whopping £62.6m - Funding Circle's November total. Expect to see the first £100m+ origination month for a platform in 2016. 2015 saw lending to businesses as the biggest segment by volume, with Equity Crowdfunding enjoying the fastest rate of growth, as can be seen in the table below. 

 

 

2015 Origination (£)

Y-o-Y Growth

Consumer Lending

£1,087,776,852

91.0%

Business Lending

£1,260,055,935

74.6%

Online Invoice Financing

£333,006,053

31.6%

Equity Crowdfunding

£125,464,983

134.3%

 

It was incredibly tight at the top of the 2015 origination league tables, with Zopa narrowly clinching the top spot from Funding Circle – the two having originated £532m and £530.6m respectively. The difference between the pair ended up at less than a day’s volume. In third place came RateSetter, which originated £518m over the course of the year.

 

The vast majority – 26 out of 29 platforms in the index – reported record origination volumes for 2015, with the fastest year on year growth exhibited by Landbay at 969%. However, this was from a low base in 2014 and equally impressive is Zopa’s achievement of doubling 2014’s origination in 2015.

 

At the end of 2014 AltFi Data made some predictions for 2015 origination. These predictions were based on the growth trajectories of the industry and each of the platforms. Those platforms that have either beaten or fallen short of our prediction have done so due to an increase or decrease in their growth trajectory. At the time we highlighted the likelihood of significant variance in the predictions for the individual platforms, but expressed more confidence in our estimate for the industry origination figure as a whole. You can see the full breakdown of predictions and actuals in the table below. In the 2014 article we also picked out four highlights to look out for in 2015:

 

  • A change in the largest platform by cumulative volume by the end of the year with Funding Circle just taking the crown from Zopa.

 

Not quite – Zopa’s broadening of its investor base to incorporate Institutional investors significantly increased its growth trajectory.

 

  • The largest three platforms, Funding CircleRateSetter and Zopa will all have lent more (or be very, very close to lending more) than £1bn by the end of the year.

 

Yes. Both Zopa and Funding Circle have lent more than £1bn and RateSetter will have done so by the end of January.

 

  • The industry will see 85% year on year (y-o-y) growth with 2015 volumes approaching £3bn.

 

Very close - £2.81bn vs a £2.85bn prediction.

 

  • The platform that we tip to grow the most on a percentage basis is LendingWorks, with a staggering 567% y-o-y growth prediction (albeit from a low base) on the basis of their recent strong origination.

 

No. Landbay grew the most on a percentage basis with LendingWorks (only!) posting 199% growth.

 

 

AltFi Data 2015 Volume Prediction (£m)

2015 Actual (£m)

Liberum AltFi Volume Index

2850

2806

P2P Consumer Lenders

   

RateSetter

540

518

Zopa

400

532

Lending Works

30

14

Funding Secure

4

16

P2P Business Lenders

   

Funding Circle

680

531

Wellesley & Co.

215

152

LendInvest

195

301

Assetz Capital

55

31

Folk 2 Folk

43

39

ThinCats

33

57

Saving Stream

30

64

Crowdcube MiniBonds

15

6

UK Bond Network

10

3

FundingKnight

9

19

Abundance Generation

9

6

Money&Co

5.5

3

Rebuildingsociety

4.5

4

Relendex

3

2

Online Invoice Financing

   

Market Invoice

315

304

Platform Black

23

28

Equity Crowdfunding

   

Crowdcube

75

70

Syndicate Room

24

24

Crowdbnk*

10

7

 

Look out for our 2016 origination volume predictions coming soon!

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