German Bank Hands $61 Million to U.K. Online Lender Amid BrexitBy
Varengold’s bet on MarketInvoice latest deal in asset class
Funding Circle and Lendable also drawing institutional money
Uncertainty around Brexit may be mounting as political leaders from the U.K. and the European Union clash on the terms of separation, but that isn’t slowing down foreign investors from betting on Britain’s top peer-to-peer lenders.
Varengold Bank AG, a Hamburg-based private banking firm, will provide 45 million pounds ($61 million) in annual funding for loans to small businesses arranged by MarketInvoice Ltd., the British finance company said in an emailed statement.
The deal comes a month after Dutch insurer Aegon NV agreed to fund 160 million pounds in small business loans originated by Funding Circle Ltd. in the first of several expected tranches. In March, Waterfall Asset Management LLC, a New York investment firm that specializes in high-yield securities, provided Lendable Ltd. with 100 million pounds in funding for loans it channels for consumers.
The ventures show professional investors are increasingly willing to put their money to work in the fledgling asset class as interest rates hover near zero. With a net return of 9 percent this year and historic default rates at around 4.7 percent, MarketInvoice is now generating 60 percent of its funding from institutions.
“Brexit doesn’t really seem to phase them,” said Anil Stocker, the co-founder and chief executive officer of MarketInvoice. “The opportunity of being involved in online lending outweighs the threats.”
Founded in 2011, London-based MarketInvoice matches investors with borrowers on its website. Unlike most so-called peer-to-peer firms, MarketInvoice blends the ancient business of "factoring" and algorithmic credit analysis by securing short-term working capital loans for small companies with their accounts receivable. Having arranged 1.5 billion pounds in loans, it’s the fourth biggest online lender in the U.K.