Old School City Investment Club Connects with P2P Lenders to Leverage The Crowd

By Lisa Walls-Hester on Friday 13 May 2016

Alternative Lending

Offline platform, The Route – Finance, part of The Route - City wealth club, is working with Peer-2-Peer (P2P) lending platforms, to develop its brand and bring its lending proposition to retail investors.

The Route has held discussions with a number of platforms and is working to develop a new hybrid investment product which it will launch in the next few weeks.

It is intended that The Route – Finance’s Loan Notes will be converted to a P2P offering and presented for a fixed term and lower coupon rate on other platforms.  

Bill Fleischmann - Allen

Bill Fleischmann – Allen, Head of The Route – Finance says “The Private Debt Platform originate loans where we are able to negotiate a relatively high coupon, purely because of the speed and certainty that the platform can provide.  Most borrowers are aware that, given time, they may be able to refinance these deals more cheaply via the crowd, and we are assisting them to achieve this tapered exit to everyone’s benefit.”   

The hybrid investment products offer increased benefits for The Route’s existing lenders and borrowers and, The Route says it will offer retail investors higher rates than other P2P lending platforms with a fully securitized investment.

  • Existing members will get increased liquidity, by allowing early exit/break points over the term of their loans.
  • Borrowers will be able to restructure original loans over a longer term with lowers rates and access to more capital.
  • Investors subscribing to the new hybrid products will get better rates than what is currently available on many P2P lending platforms. The Route says it achieves an impressive average return of 15 percent for its members. The repacked loan product will be offered at a lower rate but will benefit from The Route’s policy of at least 150 percent asset back security.

The first collaboration will allow The Route to offer its existing members the ability to use the Innovative Finance ISA as a wrapper through Crowdstacker for loans they have made.

Fleischmann – Allen says “The reason we approached Crowdstacker is because they were one of the few platforms that had approvals in place for the Innovative Finance ISA and we found that there was a lot of common ground about the nature and quality of products we wanted to offer.”

The new products will be subject to The Route – Finance’s own due diligence assessments on the original loan, and then Crowdstacker will add its own due diligence review.

About The Route:

The Route – City wealth club is a wealth management company based in the City of London. It has been around since 2000 and operates a division, The Route – Finance, which has provided debt investments via its Private Debt Platform since 2008. The platform offers its member’s access to short-term, loan based investments that are fully secured via realisable assets and has lent over £60 million to date on behalf of its members.

The Route’s members are high net worth individuals who typically work in the wider finance industry. Members pay an annual membership fee and then are invited to lend to businesses that require short-term finance.

The members allocate funds to the platform and The Route then lends the money to a business in accordance with pre-set criteria. A member’s minimum investment is £200,000. Returns for investors are between 12-17 percent. The Route says it achieves this return because its borrowers are willing to pay a premium for the speed and certainty of funds delivered by The Route.

The Route – Finance operates in a niche market, typically lending amounts of £500,000 to £5 million. The loans are asset-backed, usually with land and property to at least 150 percent of the loan value.

The Route says its membership is growing at around six new members per month but it wants to expand its proposition to online P2P lending platforms because of the benefits it will bring to both members and borrowers.

The Route has so far had a low profile in the lending industry due to the nature and profile of its membership. It knows it was slow to adapt to the changing alternative finance landscape and says it now wants to leverage this expanding sector. It believes the best way for The Route – Finance to raise its brand profile is collaboration with existing alternative finance players. It is currently in talks with several platforms about future associations.

Sign up for our newsletters

Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.

AltFi's new weekly US newsletter breaking down the ins and outs of America's burgeoning fintech sector. Delivered Monday 9am EST/ 6am PST.