What is Assetz Capital about?
Assetz Capital is now the UK’s second-largest peer-to-peer business and property lender and also the second largest in Europe. Since 2014, we have been providing competitive loans to credit-worthy SMEs and attractive returns to investors. We provide fairer and more accessible business lending to small and medium sized businesses and property developers throughout the UK.
Since our launch, we have lent more than 350 million GBP to credit worthy businesses whilst providing returns of 30m GBP to our investors using a number of automated investment accounts that earn gross rates of return between 3.75% – 7% per annum and also permitting manual lending at rates often above that. Almost all funding to date has come from retail investors and maintaining support for retail investment is one of our business aims.
What are the three main advantages for investors?
Firstly, we only lend to businesses who we assess as credit worthy businesses with tangible assets. Tangible security is taken for each and every loan – which is unusual for peer-to-peer lenders – in order to reduce the risk of capital losses for investors, while also lowering the cost of borrowing for businesses. We also deploy traditional credit assessment techniques rather than rely solely computer-based borrower assessments, meaning our processes are fast, meticulous and human. As a result of our processes, Assetz Capital’s expected loss rates are amongst the lowest in the industry (currently standing at just 0.35% across our live loan book).
Secondly, we cater for all types of investors. In the past four years, we have experienced strong annual growth year on year, and have attracted a wide set of sophisticated and consumer retail investors, as well as attracting family office and institutional investment. We believe it is because we have demonstrated excellent credit skills and loan performance, while delivering strong net yields.
Thirdly, we are also the only major UK P2P platform to still offer a manual investment option. This allows investors to choose exactly which borrowers to lend to, allowing them to cultivate a bespoke investment portfolio and choose appropriate levels of risk in their investments. For those wanting automated accounts, we offer a wide selection ranging from our Access Accounts to a Green Energy Account, all of which cater to those with less time to invest. This combination of accounts offers the type of control that an individual investor may require, allowing people to pick and choose from a wide range of individual loan opportunities, and also the ability to automatically lend if they are time-poor.
What are the three main advantages for borrowers?
Assetz Capital has been providing small and mid-sized businesses with flexible and quick access to funding for future business and employment growth with competitive rates.
Rather than being just a website with automated credit assessments, Assetz Capital is run by finance, banking, credit and lending professionals with huge industry experience, alongside our large UK-wide network of employed Regional Relationship Directors who visit potential borrowers and help structure the loans. I believe that this is unique to the P2P industry, and is reassuring to both business borrowers and lenders that behind the technology and website there are actual, qualified humans with relevant experience to help structure good quality transactions. Borrowers really appreciate the ability to structure their loan requirements face to face with experienced professionals instead of encountering the “computer-says-no†problem of today’s banking industry.
We’re also a lean business, and as such we have lower overheads than traditional lending institutions. Coupled with the fact that we only lend to credit worthy businesses holding tangible assets, this means our cost of borrowing for businesses is kept low.
With the uncertainty that has come with Brexit, we have found that our platform is overcoming some of the issues which many UK businesses are currently facing. We believe that fixed rate loans offer businesses a stable way to predict part of their finances, regardless of external market conditions. Brexit may put pressure on banks to reduce loan availability or raise rates substantially, but alternative finance providers such as Assetz Capital are continuing to offer fixed rate loans.
What ROI have investors made on average on the platform in the past?
As a business, we are totally transparent with our top-line numbers, and these are updated live in a prominent position on our website. In just over four years, investors on Assetz Capital have collectively earned gross returns of around 30 million GBP on their investments, relating to more than 350 million GBP in loans to date. We have a big announcement at the beginning of November that further endorses these results.
While much of our loan origination is organic, brokers have also played a vital role in referring many small and medium sized businesses to us. To date, more than 350 successfully funded projects have come through brokers, and we predict that this will grow to approaching 1,000 by the end of the 2018 year. In fact, this has been so successful, we are actively working to increase our broker network significantly in the next two years, and have recently revealed a strategy to further support brokers through a number of methods.
For example, our network of nationwide Regional Relationship Directors is supporting more brokers locally. We are also offering new product and pricing improvements to further build our relationships with brokers. Our face to face approach is very much liked by brokers and their borrowers alike and this is also a factor in our success, as is the experience of our team.
What will the soon to be launched Assetz Capital IFISA offer? Will it offer the same range of investments and interest rates as currently? Will the IFISA be flexible?
Now that we have achieved full authorisation from the UK regulator, the Financial Conduct Authority (FCA), we are preparing to launch our Innovative Finance ISA (IFISA), which should be ready by the end of 2017. While I can’t reveal all the details at time of writing, it will be highly flexible as it is an extension of our very successful model.  There is no intention to have any ISA fees for normal transactions and we also intend for our main lending investment accounts to also be available at the same rates in the ISA. We also intend to release our next generation investment dashboard that we believe will keep it at the forefront of the industry.
Will you soft launch it to existing investors first or will it be open to all from day one?
We will open the account to all comers straight away, not just existing investors.
I heard Assetz Capital is profitable? Can you walk me through some of the key facts of the financial side of the company, please?
Very few FinTech businesses are even close to breaking even, so it was a momentous day this year when we proudly claimed we made a seven-figure profit (GBP) for the last financial year to March 31st 2017. I believe that this is a testimony to our business model where we refuse to believe fast growth should be at the cost of profit and cashflow. While several others built their loan books up quickly with a more lenient approach to credit and very substantial levels of outside investment to cover trading losses, we took a more cautious approach to credit risk and built our entire business on an initial seed funding round of 1m GBP and Series A equity raising of just 5m GBP more. We have now lent similar levels to the whole of 2016/17 year in the first six months of this year and also booked profits of around the same as last year in this period. We have a healthy balance sheet and have just announced a new Series B equity raise that will bolster it further.
You are currently raising 1 million GBP through a crowdfunding for equity round on Seedrs. What will you use these funds for?
We had a very successful raise of 3.2m GBP on Seedrs in 2015, and now we are looking to fund a number of short-term capital expenditure projects, which are aimed to help the company continue its substantial growth. We believe that this may well be the last one prior to an institutional investment round or IPO but we will keep this under review and are really pleased to have not just delivered thousands of people great levels of interest through our platform but also delivered hundreds of investors a strong equity growth also as a result of the Series B being priced at 250% approximately of Series A carried out two and a half years ago..
What are your views on Brexit, the impact on UK fintech in general and on p2p lending in particular?
With the many political, regulatory and economic twists and turns of 2017, uncertainty continues. While many of those involved in business and investment are nervous, there are others benefiting and seizing on opportunities. Since the Brexit vote, no one is really sure of what the longer-term impact will be on businesses, investors or the UK market in general, however from the P2P market perspective, this has been an important year to further solidify its stature and firmly place it as a viable alternative to banks for both investors and borrowers.
We see that Brexit has actually had a positive effect on P2P, and all indications signal that the industry will benefit further in 2018 as a result of banks seeming to entrench somewhat ahead of the outcome being more visible. The impact on wider Fintech is more varied and we see a disincentive to set up in London to some degree for some businesses but for those here I expect they will take a wait and see approach. The possible loss of the ability to ‘Passport’ UK regulatory permissions across Europe or vice versa could be the major loss for companies intending to operate both here and in Europe.
The main issue is that the result of the Brexit vote is still some way off and indeed it is entirely possible we could see a continuation of the recent economic strength if Brexit turns out well economically and some real challenges if it does not. It is too early to call but the former would be my expectation on balance.
Where do you see Assetz Capital in 3 years?
Assetz Capital will continue to grow, to offer new and innovative products to investors and borrowers, and to hold true to our founding principles of fairness to all our stakeholders including investors, borrowers, shareholders and staff. We have already seen growth of around 100 percent year on year since 2014, and we believe that this rate will continue. We have very ambitious plans for the business, and certainly we see ourselves in three years as becoming one of the leading secured lenders to creditworthy businesses looking for additional funding as well as one of the top few P2P platforms for investors looking for choice, flexibility and fair, risk-adjusted returns.
We want to be recognised as being a real contributor to the economic success of the country, on several levels including helping house building volumes increase to address the housing shortage, helping businesses grow and increase employment, helping private investors earn more from their hard-earned capital, helping institutions deploy capital on market-leading risk return ratios and finally helping incentivise and contribute to a greater quality and breadth of financial education in today’s society.
P2P-Banking.com thanks Stuart Law for the interview.