Victory Park Capital Advisors seems to be following the lead of Mayfair hedge fund Marshall Wace in pursuing what they hope will be a lucrative source of new loans. City sources told newspaper The Independent that Jefferies stockbrokers is helping advise on the possible float, with other US investors expected to follow.
Until recently, P2P lending in Britain has mostly consisted of members of the public making small deposits which are then lent out to small businesses or individuals. Platforms like Zopa and Funding Circle check the borrower’s creditwothiness and act as a conduit. Last August, Sweden listed TrustBuddy acquired a UK based financial services company with interim permission under the new regulation by the FCA. TrustBuddy is currently hiring key staff for its UK business.
Over the past year, institutional investors have been joining the P2P field. In the US, hedge funds, banks and other mainstream institutions have been in the market for years, attracted by healthy returns. Yields are higher than traditional banks’ because of the platform’s low overheads. In October 2014, TrustBuddy announced its second major institutional lending capital investor, covering an initial EUR 12m. In connection with this announcement, TrustBuddy stated that it believes that the US model of 50% institutional capital and 50% retail capital is a viable future target, but currently less than 5% of the P2P loan funding is institutional capital.
Victory Park has been keen to expand in the UK and it recently struck a deal with Assetz Capital to lend up to GBP 150m to its customers. Marshall Wace launched P2P Global Investments on the London Stock exchange last year, raising GBP 200m. The project proved so successful that it added a further GBP 250m last month. Victory Park’s project is thought to be a direct copycat, similarly structured as investment trust. Reports in the US suggest Victory Park is targeting an 8%% dividend yield from its fund compared to Marshall Wace’s 6-8%.
Says Giles Andrews, CEO of Zopa in an interview: “Institutional investors are not daft: the fact that they want to come here is a good reflection on what we do. We’d be delighted to partner with them. Institutional investment is less lumpy than that from the public and could play a big part in helping companies like ours to grow.”