Zopa stake boosts TruFin annual results

The firm’s inaugural results show a re-valuation of its stake in Zopa (upwards).

TruFin, the AIM listed fintech lender and payments provider, has released its first set of annual results following on from its public listing back in February. The numbers show a 7.67 per cent uptick in its valuation of its stake in p2p lender Zopa in 2017.

TruFin, which says it used an external company to aid the valuation of Zopa, re-valued its holding upwards by £2.6m to £36.5m over the course of the year. The firm, which was spun out of hedge fund Arrowgrass’ fintech holdings, holds a c.15 per cent stake in Zopa bought by Arrowgrass in 2014 for £15m. TruFin was set up by Henry Kenner, one of the founders of Arrowgrass, who is also its CEO and chairman. The hedge fund itself was launched by a group of Deutsche Bank traders in the wake of the financial crisis, including Kenner.

The Arrowgrass Master Fund has been investing into fintechs since 2014. Acquisitions include three cash-flow finance focused fintechs: Distribution Finance Capital (supply chain finance), Oxygen Finance (dynamic discounting) and Satago (invoice finance) as well as the Zopa stake which collectively make up TruFin's portfolio.

In its annual report TruFin said “Zopa plans to launch Zopa Bank to enable it to lend directly from its own balance sheet and offer customers a broader set of products (including deposits, credit cards and auto loans) and services. In doing so, it will significantly increase its addressable market and capture the full return from these loans, as opposed to solely a brokerage fee. Zopa is in the final stages of its bank licence application which is expected to be completed in 2018.”

Kenner says the short to medium term organic growth opportunities for all of the businesses within the TruFin stable is strong.

"The directors are particularly encouraged that demand for the TruFin Group's services continues to increase, demonstrating that its customers are keen to find new sources of finance and new ways to manage their cash flow and treasury functions,” Kenner said.

The regulatory backdrop, he adds, is supportive for new entrants and new products helping its prospects for future growth.

“TruFin Group's capacity to grow will be significantly enhanced by DFC and Zopa being awarded bank licences,” he added.

"Whilst this is not confirmed the application process is in an advanced state and the Directors are confident of a successful outcome.”

TruFin saw gross revenues of £3.8m in 2017 meaning a loss before tax and exceptional items for the year of £9.7m. Its consolidated net assets as at 31 December 2017 are £91m.

Kenner said: “This has been a momentous period for TruFin Group, beginning with the formation of the Group during the year and culminating in the successful stock market listing in February 2018.

“With robust customer demand, the Group has seen strong growth across the businesses throughout the year and this is continuing in 2018.”