Although others have flirted with the move, Wellesley becomes the first peer-to-peer platform to offer mini-bonds. The capital raised by the bond will be used to invest in property and other secured opportunities – with the goal of markedly increasing the platform’s lending capacity. Investors in the product can expect to see market-leading rates of 6% gross over 3 years, 6.50% over 4 and 7% over 5. Those interest rates top the typical returns of actually investing via the Wellesley platform. Investments in the mini-bond are non-transferrable.
Graham Wellesley, Chairman and Co-Founder of the platform, commented:
“The launch of our mini-bond is an important milestone for Wellesley as it will allow us to significantly increase the number and value of loans that we can offer, as well as diversifying our sources of funding. We have grown rapidly since launching in November 2013 having lent over £56m against secure assets worth over £94m. This is testament to our business model and attractive proposition to lenders and borrowers, as well as the new lending environment.”
“With alternative finance providers firmly establishing themselves as key to the financial system as traditional players scale back their lending, we’re excited about the market opportunities we see as we continue to both increase the scale of our business and the product range of our offering.”
Whilst legally defined as a mini-bond – the Wellesley savings bond is very different to the mini-bonds that we have thus far seen surfacing within the alternative finance space. We’ve had mini-bonds in the crowdfunding space issued by startups in order to finance the purchase of assets or to facilitate new store openings. The Wellesley savings bond is very different. Though technically unsecured, the funds raised will be used to provide new secured loans on the platform.
Wellesley sports an unusual structure – the platform actually invests its own capital initially in every loan before later refinancing that loan to the “crowd”. The money raised by the mini-bond should allow Wellesley to massively ramp up its lending. For investors, it’s a unique opportunity in that your exposure is direct to Wellesley itself – not to the platform’s underlying business borrowers.
This latest innovation will only better what has been an impressive first 10 months for Wellesley. The platform has lent upwards of £50m (secured against assets worth £88m) in spite of launching in November of last year. The platform has now jumped into third place in terms of cumulative lending volume among the peer-to-business lenders in the Liberum AltFi Index.