Simon champ formerly at City investment bank Liberum and now the prime mover behind P2P Capital Solution is determined to transform the P2P lending space. An early investor in equally disruptive betting tech firm Betfair, Simon believes that the P2P is huge and transformational but it needs larger institutional amounts of money on platforms to really make a difference. At his new business P2PCS, hedge fund Marshall Wace is now backing Champ to make that change, first by listing a closed fund that will invest across the P2P space and then by building a global advisory business that will work with AltFinance platforms to help raise funds from wealth advisors and other institutions. If Champ has his way the European P2P space will become as popular with institutional investors as it is in the US.
Last week AltFinanceNews caught up with the enthusiastic Champ to find out more about his ambitious plans for funding the P2P space
Can you explain the rationale behind the deal between Liberum and Marshall Wace – and P2P CS? It sounds like Marshall Wace is making a very big bet on the Alternative Finance space?
Marshall Wace have a history of incubating new business innovations in financial services. They bring a real understanding of how to deliver scale and the highest quality infrastructure.
Are there still plans to launch a separate listed fund, and if so when? How will this work with P2P CS – will you run separate funds for other investors in the future?
Yes, we intend to launch a UK listed permanent capital vehicle in the New Year. We believe a listed investment vehicle is the ideal structure to allow UK institutions access to the exciting yields of peer-to-peer lending. It is possible in time that P2P CS could manage other pools of capital targeted at other areas of alternative finance. We strongly believe that technology will drive a better customer experience and that will lead to numerous investment opportunities away from the banks.
What’s your take on the specific opportunities for institutional investors within the alternative finance space? Where are you concentrating most of your attention?
In Europe the industry is still very small and there is no route currently for institutional capital in Europe to gain access to peer-to-peer lending. Consumer lending is the most developed right now but SME is catching up fast so we envisage giving institutions access to these two verticals of lending initially. However, traditional banking barriers around businesses like trade finance, property lending and factoring are beginning to crumble, and in the next few years we believe many opportunities will be created for direct access of institutional capital. We hope to be part of that drive.
Which particular opportunity excites you the most personally?
Personally, I am most excited about creating a permanent capital vehicle as I believe that will be a key building block of the peer-to-peer industry coming of age. Permanent capital will bring a solidity to the financing of the industry and will be a huge help to the platforms in developing their business models.
Are you planning to make P2P CS a leader within the sector and, if so, how are you planning to do so?
The industry is going to be huge, even if it takes just 10% of the lending market it the next few years it will still require many billions of funding capital. Scale for the sake of scale is not a good thing, however, P2P CS certainly hopes to be an innovator and to be one of the first companies to make investing in this new asset class straight forward and rewarding.
What would be your advice to platforms out there looking for institutional funding from your business? What should they do? How should they present their proposals?
We think a good quality customer experience for both the borrower and lender is key to the success of a platform before any platform considers institutional capital. We do believe that technology has a big role to play in making the industry’ accessible to institutions, and as the infrastructure improves so will investors’ confidence. Platforms that succeed tomorrow will probably structure their businesses with institutional funding as a key part of their capital from the very outset.
What’s the next big thing to watch out for within alternative finance?
We are excited about the potential within international trade finance, but it’s very early days…