February UK Volume Origination Roundup – Leap Year Success for UK Alternative Finance

By Sukhwinder Shoker on 4th March 2016

The Liberum AltFi Volume Index (UK) rebounded in February and established a new record month of origination - £301.8m.

February UK Volume Origination Roundup – Leap Year Success for UK Alternative Finance

Oct15

Nov15

Dec15

Jan16

Feb16

Liberum AltFi Volume Index YoY Growth

81.36%

75.88%

66.49%

55.20%

47.63%

Whilst an uncertain macro-economic outlook has resulted in elevated volatility in quoted markets P2P seems to be weathering the storm. Nonetheless, YoY growth for the index has now declined for five consecutive months since October 15. As regulatory requirements for peer to peer lending continue to intensify platform resources, already stretch by meteoric growth, are likely to be increasingly dedicated to compliance related matters. These resources might otherwise have been dedicated to borrower origination and to lure in investment capital.  This may, consequently, have led to a slower rate of monthly loan origination growth.

Figure1: Monthly Volume Origination Peer to Peer Consumer Lending Vs Peer to Peer Business Lending

January represented the first month since October 2014 in which consumer lending outstripped origination in business lending and invoice financing. However, January now stands out as an anomaly as normal service resumed in February with a new record being set over the month by business funding. Interestingly the gap between consumer and business lending was the widest it has been since February 2015 exactly one year ago.    

Figure 2: Monthly Volume Origination for Assetz Capital, Saving Stream and Platform Black

A number of records were achieved by SME lending platforms contributing to the £141.9m posted by the sub-sector as a whole which represented month-on-month growth of 33.6%. Funding Circle stormed to the front with £65.5m in financing transacted over the month setting a new record month for a single platform in the index and further extending the previous industry record set back in November 2015 – also by Funding Circle.  Two platforms which have really accelerated in February are Assetz Capital and Saving Stream both of which accomplished new records. Assetz Capital has suffered from low or negative year-on-year growth for most of 2015 but perhaps February may come to represent a turnaround for the Manchester-based platform as YoY growth improved spectacularly to 195.2%. YoY growth for Saving Stream also exploded to 216.3%!

Invoice Financing gathered pace in February largely driven by a surge in invoices traded via Platform Black. The platform financed £10.2m in February alone, a substantial growth of 263.1% on their last 6 month average origination. Similarly to Assetz, last month may herald a turnaround at Platform Black as new management gets to grips with the challenge of scaling up in an increasingly competitive landscape. In other sectors, equity crowdfunding blasted its way to a record month of financing, further adding to the spike in total monthly index growth.

It will be fascinating to see whether these resurgent platforms will be able to sustain these rebounds after signs of waning growth last year.  

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