10 years ago, the first peer-to-peer lender was founded in a barn in Buckinghamshire in March 2005. That was Zopa which has now lent nearly £750m, and expects to hit £1bn this summer.
Meanwhile the peer-to-peer finance industry has blossomed throughout the world with the global industry now worth more than $10bn.
Zopa says it has lent money from more than 58,000 individuals across Britain to more than 107,000 individual borrowers for cars, home improvements and paying off existing debts. The company has delivered an average rate of return of 5.6 per cent after fees and any losses from bad debts over the past ten years to its lenders.
Giles Andrews, Zopa CEO and co-founder, said: “We created Zopa because we saw the potential to bring people together over the internet without having to go through a bank. This has prompted a revolution in the financial sector worldwide.”
Based on the average return of 5.6 per cent after fees at Zopa, if you had put £10,000 in Zopa on the day it was founded, that stake would now be worth £17,000 assuming that all funds had been relent, the company claims. Over the same period the FT-SE 100 climbed 96 per cent, so £10,000 invested then would now be worth £19,600.
But the same amount in a UK savings account would only have grown to £13,600 with an overall return over the decade of 36 per cent. House prices? They’ve gone up by just 23.7 per cent in comparison, growing £10,000 to £12,370.
Investors who want to invest in the fast growing P2P lending industry from the equity point of view have the possibility to do so. The current listed names are Lending Club and OnDeck Capital in the USA and TrustBuddy in Sweden. TrustBuddy was the first ever P2P lending provider to be listed on the stock market and is Europe’s leading player. Its valuation is only a fraction of the US peers’, so investors would be wise to seriously consider building a position in the company.