Founded in 2011, ThinCats helps businesses to access loans ranging from £100,000 to £5m. Rates are determined by the marketplace via an auction processes. There are two types of auction: a ‘Fixed Rate’ auction, where the borrower offers a single fixed interest rate and the loan is filled on a first-come-first-served basis, and a ‘Variable Rate’ auction, where each lender decides the amount they wish to lend and the interest rate they require.
Last December, ESF Capital – an institutional P2P accelerator business – acquired a 73.4% equity stake in ThinCats. For a number of months prior to the acquisition, the company had been supplying lending capital to the ThinCats platform, with the long-term plan of acquiring a controlling stake in the company.
ESF Capital will underwrite the LAMP deal, with Capital Engine – a firm that provides term loans to UK businesses – acting as a sponsor, structuring the loan for ThinCats and investing half of its arrangement fees into the loan. LAMP Group will use the money to consolidate existing debts and cover costs as it prepares for a round of equity fundraising.
“LAMP is a well-established business with a significant market presence. This shows that P2P lending in general – and ThinCats in particular – is beginning to vie with traditional lenders as a mainstream provider of capital to increasingly large companies. We expect to see an upward trend in both the size and variety of deals as more businesses discover the benefits of financing through P2P lending.”
ThinCats is calling the loan the largest ever non-property loan issued to an SME by a P2P platform. The LAMP deal seems to have ousted from the top spot a loan issued by ArchOver to the healthcare company Duradiamond Healthcare in March. The loan, worth £2.3m, was then billed as the largest non-property related working capital facility ever raised by any platform anywhere in the world.
Christopher Rothschild of Capital Engine offered his thoughts:
“This transaction shows that ThinCats is maturing into a marketplace where established businesses can raise structured term debt on attractive terms. We are keen to identify more good borrowers and make further inroads in the underserved SME loan market by structuring loans which enable borrowers to achieve their aims while also offering good yield investments to lenders.”