By Ryan Weeks on 10th December 2014
One of the nation’s largest peer-to-business lenders finds itself in the unusual position of having a lengthy pipeline of deals and not enough capital to fund them.
ThinCats is experiencing a December flurry of deal origination. The platform reportedly has 42 loan opportunities worth around £64m waiting in the wings. The problem – for now at least – is that the £64m figure is at least 10 times the size of ThinCats’ average monthly lending capacity. The platform’s sponsors are therefore being forced to hold back deals until such a time as they may be financed.
In answer to this problem, ThinCats CEO Kevin Caley has suggested that the platform is actively looking to forge institutional partnerships, and not for the first time. The plan is to bring in institutions in order to underwrite the larger deals without driving down interest rates across the platform. The genesis of the P2P ISA may represent an alternative solution to ThinCats’ capital shortages, but Mr. Caley believes the arrival of the tax wrapper cannot happen until after the election and will now be delayed by at least 6 months.
Mr. Caley has also pointed out that a pretty benign investor environment has been created on the platform due to the current level of the borrower demand. Interest rates are “artificially high”, and some prospective borrowers are going so far as to offer additional cash-back incentives. Several of the 9 auctions currently live on the site are advertising up to 5% in cash-back offers. Under such conditions, ThinCats supply/demand conundrum might be best addressed by private investors looking to cash in on unusually lucrative circumstances.