By Ryan Weeks on Tuesday 13 December 2016
US marketplace lender ApplePie Capital scores debt capital from TowerBrook Capital Partners.
ApplePie Capital, the first marketplace lender to focus solely on the franchise industry, has closed a pair of major funding rounds. The platform has signed a two year, $180m loan purchase agreement with TowerBrook Capital Partners. The funding will come from TowerBrook’s Structured Opportunities Fund (TSO) and a credit facility provided by SunTrust Banks. The TSO investment fund targets structured equity, structured assets and structured debt investments.
In addition to the loan purchase deal, ApplePie announced the completion of a $16.5m Series B fundraise, co-led by QED Investors and Fifth Third Capital – a direct equity investment subsidiary of Fifth Third Bancorp. QED’s participation follows on from its involvement in the platform’s seed and Series A rounds. Other previous investors involved in the Series B round include Signia Venture Partners (which led a $6m Series A fundraise for ApplePie in April 2015), Freestyle Capital, and Prosper President Ron Suber. Colchis Capital Management also entered into the fray as a new investor.
Tim Norris, former chief risk officer of GE Capital Franchise Finance has joined ApplePie as a strategic advisor as part of the fundraise.
ApplePie is unique within the US and perhaps globally for its focus on the franchise industry, a growing segment of the US economy with $45bn in annual capital demand, according to the platform. There are said to be around 800,000 franchise firms within the US, employing 1 in every 15 Americans.
ApplePie’s specialism has given it a strong start in an otherwise crowded marketplace lending sector. The firm has formed partnerships with 40 franchise brands, while funding over $50m in loans. $7m in principal and interest has already been returned to its investors. The platform’s average borrower has a 750+ FICO Score, and $2m median net worth.
ApplePie offers investors targeted returns of 7-12 per cent. One of the main selling points of the platform for investors is that franchises benefit from ongoing operational support from their parent brand, in addition to replicating proven business models.
“At our core, we are a growth delivery system for the franchise industry,” said Denise Thomas (pictured above), CEO and co-founder of ApplePie. “We unlock value for our franchise brand partners by providing capital to their franchisees, which helps brands grow. The investments announced today will allow us to scale and dramatically advance our mission of transforming franchise finance, while providing TowerBrook with unprecedented access to high-quality credits in proven small businesses.”