A brief update on a rare piece of inter-platform activity, as iwoca turns to one of the UK’s more unique P2P players in an effort to raise money.
The credit facilities specialist iwoca is raising £1m through the UK Bond Network platform. iwoca raised $20m last week in a Series B round led by German VC firm Acton Capital Partners, which to a certain extent de-risks this latest bond issue as an investment opportunity. The £1m bond is being sought in order to expand Iwoca’s lending operations (and to refinance existing short term bonds as they mature).
The £1m bond will pay 9% gross per annum on a quarterly basis, over a 360 day term. Principal repayment will occur at maturity. The iwoca bond is secured against a pool of the platform’s loans, which must be maintained at a certain level (in terms of performing loans within the pool) in order to provide the agreed to level of coverage. The £1m auction begins at 9am BST on Monday next week.
Past examples of cross-platform pollination have typically involved an equity crowdfunding round. Assetz Capital, for example, recently raised around £3m through the Seedrs platform. Seedrs has also hosted rounds for Trillion Fund, Landbay, CrowdLords, CrowdCanDo and PledgeSports. Seedrs will soon attempt to raise £2.5m on the platform for itself, as a top-up to a recent £7.5m Series A round, which was led by the acclaimed fund manager Neil Woodford.
iwoca’s decision to borrow from UK Bond Network may well be the first instance of a platform raising debt capital through another platform.
So what’s iwoca’s logic here? We know that the $20m in equity finance that was raised by the platform last week will be at least partially used to issue an additional $150m of loans across the UK, Germany, Poland and Spain. But that $20m will also be used for the purpose of platform improvement. iwoca sources have suggested that a portion of the Series B money will be used to ameliorate the platform’s technology. So for what purpose has the extra £1m been raised?
iwoca – a balance sheet lender – may simply be looking to diversify its capital supply. And if ever there were a time to test out UKBN as a capital source, now is the time, as the platform’s private investors will likely be heartened by iwoca’s recent fundraise.
We’ll keep an eye on the success of the auction.