Global Credit Investments becomes the first Australian fund to buy loans from Lending Club and Prosper.
Set up by former Goldman Sachs banker Steven Sher and former Bain & Co consultant Gavin Solsky, Global Credit Investments (GCI) has become the first Australian fixed-income fund manager to invest in peer-to-peer loans, according to The Sydney Morning Herald. This pioneering fund has been buying loans from Lending Club and Prosper for about a year and has built a portfolio approaching $10 million, with about 20 investors.
GCI invests in a diversified pool of assets by across a range of online marketplace lending platforms. The company offers a diversified income fund – by the name of the GCI Diversified Income Fund – that offers investors high returns, low volatility and diversified risk, with a fee of 1%.
Australian investors cannot ordinarily invest in offshore platforms confined instead to local solutions, such as DirectMoney, Society One, RateSetter Australia and many more. GCI has formal arrangements with Lending Club and Prosper that allow the company to buy loans automatically based on pre-set parameters. According to the fund, the two US platforms are currently publishing enough information to guarantee a transparent and fair credit assessment for all loans.
"We are making an active decision on every loan that we buy. Lending Club and Prosper publish all of their data, so it is completely transparent,” Mr Solsky told The Sydney Morning Herald. “We can't get the identity of the borrower, but we can get data on every payment that has been made on these loans, their [personal credit score], whether they own their house, have a mortgage, rent their house, how long they have been employed.”
The fund expects to increase its investment universe by buying loans also from other platforms in the foreseeable future, including Australian ones. However, representatives of the vehicle admitted that local investments would at this stage be premature, given the lack of robust track records.
“You can go and invest in loans on Society One, but in a sense you are doing it somewhat blind,” said Mr Sher. “Is it the right asset class, the right platform, the right price? Have you thought about the possible downside?"
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.