By Sam Griffiths on 4th August 2014
The month of July saw another record month for the Liberum AltFi Volume Index with a month on month increase of £163m. This record performance was predominantly driven by the peer-to-business space – which continues to flourish as the jewel in the crown of the alternative finance space.
We highlighted the business lending sector’s market-beating performance in last month’s Liberum AltFi Index roundup – and little has changed since then. In fact the month on month growth rate of the P2B space has increased – jumping from 10.40% in June to 14.74% for July.
That growth has been partly stimulated by the performance of LendInvest – which boasts a 55.50% growth rate after lending a massive £24,428,898 jump in its volume lent since the end of last month. This spike in volume can likely be attributed to LendInvest’s “incubator”, Montello Capital’s, decision to begin purchasing whole loans through the platform. But with several third-party institutions reportedly considering following Montello’s example, near-industry leading monthly volume figures might soon become the norm for the secured lender.
The peer-to-business arena seems to feature at least one platform with a sky-high monthly growth figure every month. This month it has two. Wellesley & Co. rivaled LendInvest’s gaudy growth with a 55.26% growth rate of its own. The platform lent a massive £26,265,738 through July.
Both LendInvest and Wellesley belong to a uniquely strong middling tier of peer-to-business lenders. In the P2P consumer sector there is a gaping gulf between the outright leaders and the much younger platforms. Zopa and RateSetter account for nearly £900m between them and no other consumer facing platform has yet achieved scale enough to even enter the index (0.1% of the total index volume). In the invoice finance space – Platform Black and MarketInvoice are the only serious operators. The equity arena features closer competition between platforms – but only one platform (Crowdcube) has thus far entered double figures in millions funded (the exact figure for Crowdcube is £32,097,632).
These “challenger” P2B platforms (LendInvest, Wellesley, Assetz) have monthly deal flows that are comparable to the sector leader (Funding Circle), but are as yet nowhere close to its cumulative volume figure (£326,988,620). They are a key factor – perhaps the key factor – in the consistently high performances of the peer-to-business space.
The peer-to-peer industry as a whole (within which lies consumer lending, business lending and online invoice finance) had a monthly growth rate of 9.44% – the highest figure since March (9.45%). £155,194,106 was lent through the various peer-to-peer platforms in July.
RateSetter is a key contributor to that growth. Despite ultimately sharing the feat with Wellesley, RateSetter by a hair became the first platform ever to lend over £25m in a single month. The total figure for July was roughly £26m. Rhydian Lewis, Founder and Chief Executive of the platform, shared his thoughts:
“We have emerged as the leading UK P2P platform at a time when the industry is consolidating its position as a genuine rival to traditional financial institutions.”
“As the only P2P company worldwide to have a risk rating, and with the benefit of our market-leading Provision Fund, RateSetter is the go-to platform for savers looking for low risk and high return.”
“RateSetter was conceived with the consumer’s best interests at heart and this will continue to be our focus. We have appointed Alan Hughes, who led First Direct’s success, as our first Chairman to further improve customer experience.”
“We will also continue to partner with like-minded companies to disrupt the market in order to offer improved finance solutions for Britain’s consumers.”
Finally, Crowdcube showed no signs of slowing down in the summer heat, posting its highest growth rate in the history of the Index (15.57%). It was a strong all round month for Crowdcube. Of the £4,323,970 pumped through the platform – £1.2 million was actually raised for the platform itself, and in just 16 minutes!
Join AltFi for its third annual Alternative Income Forum, exploring closed-ended funds (investment trusts) specialising in generating an income using alternative assets such as specialist finance, P2P lending, direct lending, asset leasing and more. Hear from the leading investors and fund managers in this rapidly growing market.