Wellesley & Co., one of the few peer-to-peer lenders to take balance sheet risk alongside investors, has discontinued its equity crowdfunding campaign on Seedrs. The fundraise, which sought to raise a minimum of £1.5m, or as much as £4m, was marred by controversy from the start, with Wellesley receiving a First Gazette notice for compulsory strike-off from Companies House on the eve of its launch.
When the late accounts finally arrived, further doubt was cast over the campaign, in particular due to the assessment of the company’s auditors, BDO: “The Group and Company is dependent on raising further capital to continue to operate for 12 months following the date of approval of these financial statements.”
But with the Seedrs campaign now pulled, Wellesley has written in a statement that the company is delivering profitability and continued growth, “which is not contingent on securing additional capital”.
The state of Wellesley’s balance sheet has been a particular point of focus during the course of the campaign. In addition to running a retail funded peer-to-peer lending platform, the firm has also launched a pair of mini-bonds. The first raised £25m, while the second had a maximum issue size of £50m. The proceeds of these bond issues go directly to Wellesley Finance Plc as working capital, and can explicitly be used as lending capital on the Wellesley & Co. platform.
The company last raised equity money in September, a £2.525m raise which came predominantly from founder and CEO Graham Wellesley (pictured above), who owns 48.66 per cent of the company. Mr. Wellesley contributed £2.350m of the total sum, “partly supported by a £1.7m loan from the company”. This loan was granted to Mr. Wellesley by Wellesley Bridging Co. at a rate of 10 per cent per annum, with a term of 12 months. Repayment will be made via the sale of a property which Mr. Wellesley owns.
Wellesley has issued the following statement on the failed Seedrs fundraise:
“Wellesley Group has chosen to discontinue its current crowdfunding campaign on the basis that it has not achieved sufficient scale to make a material impact to the company’s growth. Crowdfunding remains an activity which we are very interested in strategically as it gives us the opportunity to further deepen relationships with our investor base and contribute to giving them an ever-greater voice in the way that we run the business. This comes at a time when the Group’s financial performance has improved with profitable trading and organic growth over the last six months.”
“We are pleased to report that the business traded profitably through H2 2016 and ended the year with a positive Net Asset Value in excess of £1m at the consolidated group level.”
“Wellesley is now delivering profitability and continued growth, which is not contingent on securing additional capital. Should we encounter an investor who shares our values and commitment to positive customer outcomes in the future, we will consider additional equity investment which will allow the Group to accelerate the growth it is presently experiencing.”
“We are confident that we have made the best decision to provide for Wellesley’s future growth, and are in a strong position to continue to grow the business throughout 2017 and beyond.”
