Following on from our AltFi Down Under series we continue to watch as the Australian alternative finance space develops at a rapid pace. This week OnDeck announced that it would be expanding into Australia via a partnership with MYOB. We have also seen a selection of new platforms launching in the space. This includes CrowdfundUP, Australia’s first real estate platform and Kikka Capital, a new small business lending platform. We caught up with CEO of Marketlend, Leo Tyndall, to find out more about his platform.
Could you briefly introduce yourself and Marketlend for us?
Launched in early December 2014 by Tyndall Capital est. 2006, Marketlend is the Australian first peer-to-peer lender offering SME finance in form of working capital loans, and business loans. Typically secured against the supplies or in some cases property collateral.
· To investors we offer a loan management platform that enables them to buy loans in part or whole on a marketplace, and managed by us. Also they can trade the loans through our trading platform.
· Our structure is a traditional debt trust structure where we have an independent trustee that handles all monies and the security for the investor is the loan or part thereof.
· We have an automated credit application and credit risk algorithm assessment process that rates the likelihood of repayment of the loan.
Why did you set up Marketlend?
We saw an opportunity in the SME finance space where price competitive solution for business to match receivables with payables could be offered using the same methods as banks for funding and giving borrowers direct access to the investors.
Why did you see a need for it within Australia's finance industry?
We saw that the banks tend to focus on mortgages, and offer low returns to investors. Other competing products were factoring, and other non-property collateral offering for lending, corporate credit cards. These are expensive and there are few banks competing in this space. We saw this as a space where there was sufficient margin to make it profitable and yet not well serviced by traditional banks. The only products that seem to be available was American Express or corporate credit cards
How would you say Marketlend fits into the alternative finance space in Australia?
We sit in the more conservative risk profile and the commercial side of the alternative finance space, for want of a better word.
Is peer-to-peer lending popular and a well-known source of funding in Australia?
Peer to peer is very embryonic and we prefer to call it marketplace lending as the commercial solution. Other players in the market are focusing on personal loans and only two recent UK operations opened in the last quarter of last year in Australia.
What attracts both investors and borrowers to your platform?
What attracts investors to our platform is high yields typically at least 3 to 4% above bank returns, significant safeguards like independent trustee, security and transparency
What is the average trade size on your platform?
Looking forwards what do you expect to happen in the space in 2015?
We expect to see at least 4 to 6 new players in the marketplace competing in various different sectors, personal loans commercial property and SME finance
What do you think the biggest challenges will be?
Biggest challenge is building a history, and this is really only achieved over time and with sufficient subscription from investors and borrowers to be able to do so
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.