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Neil Woodford Backs P2P Lending

RateSetter has received a £20 million investment valuing the platform at £150 million. 

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Woodford Investment Management and Artemis are leading a £20 million round of investment in RateSetter with Woodford investing £8 million, while Artemis is adding £3.2 million. The rest of the money has come from smaller funds, family offices and existing shareholders.

Rhydian Lewis, Chief Executive and founder of RateSetter, commented:

“We are determined to become a household name in the UK. By attracting investors like Woodford and Artemis we are positioning the company as a real business that is no longer reliant on venture capital.”

When Neil Woodford, recognised as one of the City’s top fund managers, launched his new equity fund back in June 2014 he put 2.8% of the new Equity Income fund into HSBC shares and yet merely two months after this he sold the position, citing the problem of the increasing size of the fines levied on banks. Prior to that he hadn’t held any banks in his portfolios since 2002. The investment in RateSetter is being heralded as Woodford’s first foray back into investing in the financial sector. 

It is likely that this £8 million investment comes from Woodford’s new £200 million Patient Capital Trust. The structure of the trust means that it is easier to invest in unlisted and less liquid companies, like RateSetter.

Woodford explained:

“Patient capital investors work closely with early-stage businesses and help nurture them to achieve commercial success.”

According to AltFi Data, RateSetter has lent £562 million to date and has the largest market share of any UK platform with 22.88%. In February RateSetter became the third UK platform to hit the half a billion mark. This is in part driven by the fact the platform is becoming increasingly hybridized. Whilst consumer lending remains at the heart of the proposition, the platform revealed in December that it has also started lending to SMEs and lending against property - channelling funds from individuals, businesses, institutions and charities/ livery companies.

Neil Woodford is one of the most successful and respected fund managers in the City. He worked at Invesco Perpetual from 1988 where he ran two funds, Invesco Perpetual Income and Invesco Perpetual High Income fund, which together had £24 billion in assets under management. Here Woodford built up an extremely impressive track record and was able to bring reliable returns even during periods of market instability. The Perpetual High Income fund grew by 12.06% per annum over the past 10 years, while over the same time period the Perpetual Income fund grew 11.79% annually. He left Invesco in June last year to set up Woodford Investment Management. The new Equity Income fund has attracted huge investor interest and is now worth £5.06 billion.

Woodford’s involvement is an indication of how the P2P space is maturing. The sector is still growing at an extremely fast rate. For example last week we reported has Funding Circle is said to be just a month or two away from breaching the $1 billion valuation mark. It is rumoured that the platform is looking to raise over £50 million within the next two months. Woodford is known as being one of the best performing fund managers in the UK but he is still building up a track record at his new fund. His investment will help bring other investors to the space who are hoping to emulate his high returns.   

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