In the same way as we did last year, we’ve used a regression analysis to make origination volume projections for 2016.
Prediction highlights:
£4.3bn of 2016 industry origination - that's 53% growth year on year. This is down from 82% last year.
Zopa to lend its two billionth pound towards the end of the year.
Proplend to grow the most on a percentage basis with a massive 208% year on year growth, albeit from a low base.
Zopa the platform that will originate the most, just shy of £1bn
Funding Circle, Zopa and RateSetter within touching distance of originating £1bn over the 12 months.
Figure 1: Liberum AltFi Volume Index with 2016 prediction.
As ever, predicting the future in such a fast evolving industry is not easy. Platforms are constantly innovating, launching new product lines and tweaking their business models. Some current examples would include Zopa flagging that it may allow retail investors to take non Safeguard covered loans and the proliferation of listed platform funds in a bid for further growth and increased profitability. It is impossible to know exactly what these innovations will be and what impact they might have on industry origination volume - it is therefore likely that there will be significant variance in individual platform predictions versus eventual outcomes.
Similarly using historical performance to predict future origination is likely to be risky when it comes to platforms such as ThinCats and RateSetter where we can safely expect to see some effect from recent changes. ThinCats has recently appointed a new CEO and sold a majority stake to ESF Capital. This is highly likely to change their growth trajectory. Our extrapolation points to a modest 4% decline in origination volume on the year but we have a strong suspicion that the recent shake-up will result in them doing significantly better than that. For their part RateSetter has relatively recently reopened to institutional money which is likely to have an impact on origination volume such that our £750m 2016 estimate could prove to be low. Indeed their monthly origination volumes have picked up since institutional participation recommenced in September.
We attach a higher degree of confidence to the prediction for the aggregated industry volumes, tracked by the Liberum AltFi Volume Index. However limitations remain - the methodology employed extrapolates historic trends, and as such cannot be relied upon to predict future events. Indeed there are several ‘known unknowns’, such as ISA inclusion, institutional participation and platform M&A, that will almost certainly affect origination volume over the course of the year. However the detail shakes down, this industry looks set to continue to grow at a hugely impressive rate.
2015 Origination Volume (£m)
Predicted 2016 Origination Volume (£m)
Predicted
y-o-y growth
Liberum AltFi Volume Index
2806
4300
53%
P2P Consumer Lenders
Zopa
532
965
81%
RateSetter
518
750
45%
Lending Works
14
26
86%
FundingSecure
16
24
52%
Lendable
8
10
26%
P2P Business Lenders
Funding Circle
531
895
69%
LendInvest
301
355
18%
Wellesley & Co.
152
155
2%
Saving Stream
64
115
78%
ThinCats
57
55
-4%
Landbay
19
50
165%
Folk 2 Folk
39
48
22%
Assetz Capital
31
31
1%
ArchOver
9
23
155%
Proplend
7
22
238%
FundingKnight
19
20
4%
Abundance Generation
6
12
97%
Crowdcube MiniBonds
6
9
54%
Crowdbnk MiniBonds
7
9
37%
Rebuildingsociety
4
8
101%
UK Bond Network
3
5
78%
Money&Co
3
5
43%
Relendex
2
4
137%
Online Invoice Financing
MarketInvoice
304
552
81%
Platform Black
28
54
93%
Equity Crowdfunding
Crowdcube
70
88
26%
SyndicateRoom
24
44
82%
VentureFounders
17
40
132%
Crowdbnk
7
15
128%
