By Sam Griffiths on Monday 4 May 2015
Institutional involvement in marketplace lending continues to gain traction in 2015.Shepherd Capital and Victory Park Capital have introduced dedicated closed funds and GLI Finance announced their intention for a similar structure at the AltFi Europe Summit 2015.
Whole loans originated by Funding Circle serve as a good representation/barometer of institutional involvement in the UK market. After first reviewing this development late last year it is interesting to track the evolution of this trend. As was also observed in our last update, the rate of increase in the proportion of whole loans originated by Funding Circle continues to slow. Indeed, in April there was a fall of 11%. This is likely to be a blip, rather than the beginning of a new trend, but we’ll have to wait and see.
As we concluded in our last update it looks, for now, like the proportion of institutional investment at Funding Circle is leveling off. This is surprising given the recent spate of new fund launches. Perhaps Funding Circle is actively attempting to control the influx of institutional capital into its marketplace to achieve a balance with the more steadily growing retail investor base? Whilst institutional funding has been welcomed by platforms as a ready source of capital to support growing borrower demand, some commentators have noted the equal importance of a strong retail investor base for marketplace lending as it is viewed to be more ‘sticky’ in the long-term.