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#Trustbuddy: The only way is up

Trustbuddy

Liberum Capital is out with more on Trustbuddy today. We are looking forward to some exciting trading days next week!

This week 2 banks bought stakes in peer to peer platforms – 1st bank investment to our knowledge. Barclay’s Africa acquired a stake in RainFin a South African platform. While in Australia, Westpac contributed to a raising by Society One – Australia’s first P2P platform. In our view these transactions have added additional credibility to the sector – positive read across for TBDY. Furthermore, Standard Chartered flagged increasing innovation in the financial industry, such as P2P in their FY13 results presentation.

Barclays Africa has purchased a 49% stake in RainFin in a transaction that is reportedly worth tens of millions of Rand. Rainfin is a South African based Peer to Peer platform, launched their platform in July 2012. RainFin facilitates consumer lending ranging from R1,000 – R75,000 with a duariton of 1 mth -1 yr. In its first year of operation they lent R3.7m. Barclay’s investment will allow RainFin to develop their corporate product range that will include supply chain, enterprise development funding, fixed asset purchases and mid sized corporate debt products.

Australia’s first Peer to Peer platform, Society One, has just closed an $8.5m funding round, with WestPac Banking Corp’s new venture capital fund investing $5m in the round. WestPac joins Rocket Internet on the shareholder register. Society One was founded in August 2012, having lent $4m to date, with their volume growing by 200% in the last 6 months.

In addition former top bank executives have been getting involved in P2P.

As the peer-to-peer industry is gaining transaction the platforms are filling their boards and shareholder registers with some of the former top banking executives. To name but a few … Lending Club the largest platform appointed former Morgan Stanley CEO John Mack to its board in 2012. Vikram Pandit, former CEO of Citigroup has joined forces with Thomas Glocer former Thomson Retuers Corp CEO, to invest in Orchard. Orchard offers an analytics and investment execution platform connecting institutional investors to platforms. Daric, a US P2P platform whom competes with Lending Club and Prosper in the consumer lending space, in a fundraising round last year added former Wells Fargo CEO Dick Kovacevich to its register.

Valuation

TBDY currently trades on 5.1x 2014 revenues, a discount of 58% to Lending Clubs most recent transaction on 12x 2014 revenues. Trustbuddy offers an unusually compelling risk-reward in our view. We re-iterate BUY and TP of SEK 8.00 per share.

We expect increased interest in TBDY post the AltFi conference next week. Information on the conference: http://www.altfi.com/

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