LendInvest is the second major peer-to-peer platform in the UK to move into the fund space. Funding Circle announced its intention to launch a listed vehicle in September, targeting a raise of £150m, and a target dividend yield of between 6% and 7%. The crucial distinguisher between this and the established fund structures in the UK market is that the Funding Circle SME Income Fund will not charge investors management or performance fees. The vehicle will also provide investors with greater exposure to SME debt than the likes of P2PGI and VPC’s Specialty Lending Investments, and also with more in the way of UK exposure. As an aside, Funding Circle’s management team recently confirmed that the European Investment Bank will commit a significant sum of money to the fund.
Judith Evans of the FT – who appears to be all over the platform-specific fund niche – reports that LendInvest will look to raise £150m for the fund via an IPO. The fund will target an 8% annual yield, and will invest mostly in loans originated by the LendInvest platform. Evans also suggests that the fund will hold equity in the LendInvest platform itself. This is especially relevant given that the the company is planning to go public at some point in early 2016.
We will likely have to wait a while for LendInvest management to corroborate Evans’ assertions, but she was on the money when she broke the Funding Circle SME Income Fund news in late June. For now, LendInvest simply stated:
“A listed fund is an attractive proposition and one that would make a lot of sense for our business.”
LendInvest announced its second consecutive year of profitability this week, having raked in £3.1m during the 2014/15 financial year. The platform has lent a cumulative total of £420m to date, according to the Liberum AltFi Volume Index UK. CEO Christian Faes revealed in the June that about 70% of the platform’s lending to that point had been funded by institutional money. If and when LendInvest's listed fund arrives, it will likely open up the platform to a broader range of institutional investors. Samir Desai, when questioned about the launch of the Funding Circle SME Income Fund, identified “long term” investors – wealth managers, pension funds, mutual funds and asset managers – as the most likely early adopters of Funding Circle's listed vehicle. We suspect that a similar set of institutions will be targeted by LendInvest, but only time will tell.