The Lendico team have said that this is a sign of the confidence that investors have in their platform and that there is a high demand for their loans from institutional investors.
Since launching in December 2013 Lendico has received nearly €1 billion in loan requests. And in that time the platform has expanded across two continents and six countries. The funding from the institutional investors will be used to expand the companies operations in its fast-growing key markets.
Lendico has found that loan request expectations in some countries have been high, especially in Germany, where total loan requests amounted to €500 million over the past year. Due to this high level of demand Lendico will be expanding its operations in Germany.
Dominik Steinkühler, Lendico’s CEO and co-founder, has said that the platform is looking to introduce business loans in the near future, expanding from the consumer loans that they offer at the moment. This is because he sees a huge opportunity for SME lending, particularly in Germany. German medium-sized companies are finding it very difficult to get financing as it has become unattractive for the banks to offer loans to SMEs. Self-employed professionals can already apply for loans up to €50,000 on Lendico’s platform. The company has found that these platforms have sparked the interest of the 20,000 Lendico investors. And so the company is aiming to meet this ongoing demand with more lucrative investment opportunities in German SMEs.
However, Lendico is also restructuring parts of its business by withdrawing private investment opportunities in Spain, Poland and South Africa. Lendico has received over €240 million in loan requests across its operations in these geographies. Despite the high demand of loan requests in these countries, the quality of the requests was slightly lagging behind Lendico’s expectations.
Dominik Steinkühler commented:
“Retail lending stopped in Spain, Poland and South Africa because of the mismatch between the quality of borrower demand and what we want to offer retail investors. Higher risk demand will only be done with investors that can bear the risk for the time being.”
Lendico aims to offer its private investors attractive returns with low volatility, and so the platform needs to find borrowers that fit this risk profile. However, in Spain for example, only 2% of the total requests were accepted and made available for investors to review and consider investing in themselves. And it is because of this discrepancy between loan requests and loan offers that private investors will no longer be able to invest in these countries. However, the opportunity will still be there for institutional investors who can stomach higher levels of risk.
This restructuring has meant that Lendico has scaled back its operations in these countries and has closed offices in Johannesburg and Madrid. It will now operate centrally from Berlin. And will continue to focus on key markets in Austria, Holland and Germany.
This is one of the first examples we have seen of a platform scaling back its operations. Lendico is clearly shifting focus away from private investors and is looking to institutional investors in order to fund the loans on its platform. The trend in the US is that the majority of the investors on the major platforms are institutions and Lendico’s repositioning could be the start of a similar trend in Europe.