By Guglielmo de Stefano on Wednesday 9 March 2016
Squirrel Group launches a $5m private equity crowdfunding offer on Snowball Effect.
Auckland-based mortgage broker and peer-to-peer lender Squirrel Group has announced the launch of a new private equity crowdfunding campaign on the New Zealand-based platform Snowball Effect. The company’s pre-money valuation is set at $22.9 million
Founded in 2008, Squirrel Group claims to help Kiwis make better financial decisions. The company is actively involved in peer-to-peer lending – through its platform Squirrel Money – launched in November last year, and in mortgages, via Squirrel Mortgages, the company’s new mortgage broking business.
If the campaign is successful, the capital raised will be employed to develop both the peer-to-peer platform and the broking business. According to National Business Review, the offer has received significant pre-registered interest. There has supposedly been $4 million of pre-registered interest from Squirrel's customer base – more than enough to fill the $2 million slice of the offer that is available to retail investors. Wholesale investors will be targeted for the remaining $3m.
Squirrel Group revealed that Squirrel Mortgages generated $548,000 of EBITDA (earnings before interest, tax, depreciation and amortisation) in 2014 and $605,000 in 2015, whereas Squirrel Money is expected to register a negative EBIT of approximately $1m this year.
Squirrel Group founder John Bolton, commented:
"The price-earnings ratio for the mortgages business is currently 18 times, which is on the high side as far as the standard goes on the sharemarket but that PE ratio is forecast to drop in the projections to nine times in 2018 and then to four times in the 2019 financial year,"
Squirrel Money is not the only player in the NZ P2P space. The platform is up against Harmoney, the best-established platform in the country, which recently expanded into Australia; LendMe, which has now kicked off its operations, following its successful licensing by the Financial Markets Authority last May; and Lending Crowd, which started operating last December.
Information about the offer has not yet been published on Snowball Effect, given the private nature of the round. We’ll relay the details once they go live.