The NatWest-owned lending platform is expanding its SME loan offering.
NatWest ‘flanker brand’ Esme Loans has agreed to a lending partnership with Pollen Street Capital, with the money coming from the private equity firm’s Honeycomb Investment Fund.
The partnership will enhance Esme’s capacity to serve the UK’s small businesses, accelerating and expanding its product offering while allowing it to meet strategic growth ambitions.
Esme, launched in 2017, is a wholly online lending platform in the mould of Funding Circle (without the marketplace element), which offers rapid, paperless loans of up to £150,000 to UK SMEs.
Pollen Street announced this morning that it planned to ramp up exposure to SME loans in its £497m Honeycomb investment trust, owing to ‘an attractive opportunity’. It also said that it had recently signed up a new partner, which we now assume was Esme.
The partnership involves the provision of funds for Esme to use for underwriting and servicing loans. No equity stake has been taken.
It may seem a surprising deal, given that Esme already has NatWest in place as the primary funder of its loans. According to Jason Dempsey, media relations manager at RBS and NatWest, NatWest will continue to be Esme's predominate funding provider, with Pollen Street playing a complementary role – helping the platform to grow more quickly.
Matthew Potter, a partner at Pollen Street Capital, said in a statement: “Pollen Street aims to partner with innovative businesses, who target underserved market opportunities with strong customer propositions. Esme has demonstrated an innovative approach which seeks to combine modern technology with a long heritage in SME lending. We look forward to working together to build a successful partnership.”
NatWest announced in March that it would seek to significantly scale the Esme project, following what it described as a successful pilot stage in which it processed over £200m of possible lending opportunities. Esme then began appearing on the London Underground and on London Buses as part of a broader marketing campaign.
In June, Honeycomb invested in ezbob as part of a Series C fundraise. Ezbob is a software provider for banks and other financial institutions and Esme Loans is one of its highest profile clients. However, NatWest's Dempsey said that the two partnerships are unrelated.
"This is a standalone partnership and is not related to Pollen’s recent investment in ezbob. Pollen Street has numerous investments through Honeycomb and its other funds, we are not in a position to comment on those deals, nor would we want to," he said.
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.