DirectMoney is set to list on the Australian Securities Exchange within the next few months; it will be the fourth marketplace lending company to go public. The others are Lending Club, OnDeck and TrustBuddy.
DirectMoney has been operating since October 2014 and now has an impressive loan book value of $6 million, having lent to over 350 borrowers. The average loan size is $15,000, with a 3-5 year term.
The company is looking to raise between $5-$10 million via the issue of between 25 million and 50 million shares at an issue price of $0.20 per share. This would value the company at about $40 million and the company is looking to target a valuation of $50 million after the listing.
David Doust, DirectMoney CEO, commented:
“Marketplace Lending is a rapidly growing industry globally. DirectMoney is a pioneer in the Australian market and is well placed to capitalise on this opportunity. Marketplace Lending disrupts the traditional bank lending model by undercutting personal loan rates and connecting borrowers and savers directly. Our model is designed to provide better value for borrowers and investors alike. We are very excited by the opportunity to drive the growth in our business with our proposed listing on ASX. The capital raising will help us further grow our business with the aim of becoming the leading Marketplace Lender in Australia.”
DirectMoney is a marketplace lender but operates a warehouse fund structure. It works by investors put their money into the fund and then the company invests that into consumer loans. Like RateSetter Australia and SocietyOne, DirectMoney targets prime borrowers, but unlike the other platforms it also lends to near prime borrowers.
DirectMoney is going public via a reverse listing; it is being acquired by Basper Limited, a listed company. This method of listing is a lot faster and more cost effective than undergoing an IPO. The Basper board and management will be replaced by DirectMoney’s experienced team.
The board of DirectMoney includes Stephen Porges as Executive Chairman. He is very experienced in disruptive industries. He was the CEO of Aussie Home Loans from 2008 to 2013. Stephen built up this company to a point where is captured about half the mortgage market. Other experience includes being the founding partner in Cabonne Partners, which specialised in advising on re-capitalisations and strategic turnarounds of public companies. Campbell McComb will be an Executive Director, he is currently Chief Investment Officer of Adcock Group, a family office and investor in DirectMoney. And Craig Swanger as Non-Executive Director, Craig has 20 years’ experience in financial services and was Executive Director of Macquarie Global Investments.
There have been snippets of criticism from commentators who point out the problems of a platform listing too soon. However, DirectMoney has grown very quickly and David Doust has said that part of the decision behind the listing is that the company is already subject to heavy financial regulation. Investors will get reassurance from the fact that the platform will be overseen by the stock exchange which will ensure the platform stays disciplined with its lending.
This listing will focus attention on the Australian peer-to-peer space. The Australian banks are already aware of the potential that this industry has. Westpac is keeping a close eye on the space, it has already invested $5 million in SocietyOne and Glenn Hodgeman has written about how the new CEO Brian Hartzer is committed to developing and pushing the boundaries with technology in the bank. The Lending Club and OnDeck IPOs grabbed the interest of banks and investors and helped legitimise the P2P space, it is likely that the DirectMoney listing will have a similar, smaller-scale effect in Australia.