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19 January 2024 - 600,000 share trade went through @ 28.0p for £168,000.
Is this stake building or a wealthy PI with £168,000 to invest ?
Happy to hold these.
Today's RNS is very much welcomed, the Directors have returned the company to profitability, fingers crossed for a dividend to be paid later this year. I've topped up my holdings.
GLA.
I feel for the IPO investors, I think the IPO price was circa 200 pence.
Will this share recover in 2024 ? One to ponder....
GLA
Agreed Pedro my thinking exactly
Hi Stanleys, that's the main difference 100% as opposed to 20% guaranteed.
Getting 11.5% for 3 years + 20% is 54.5% so a potential net loss.
The offer to convert smacks of a ponzi scheme where new investors are required to pay of others.
I own the 6.5% which is 100% guaranteed as opposed to 20% on this one . The offer is to convert current bonds to the new offering. Seems to me that the lower risk option is to buy gilts or treasuries and get 5%+ as well as the capital appreciation once rates drop as we enter recessiln
If you look at the prospectus my inference is that there will be a lot of focus on short-term lending, under 12 and 24 months. That enables them to churn the funds and potentially return far more than 11.5% over the three year term. I know of two brokers that have been doing massive amounts of bridging loans in the past year or so. That’s the way to get a brilliant return.
Can only imagine this is a ponzi scheme where new bonds are issued to pay off others
I hold the LIV3 bonds - noted price has fallen from yr high > 100p to 86p as of this a.m. during August... I assume this is due the 11.5% bond being offered (i.e. risk of LINV bonds a lot higher) plus the SP weakness? I will hang on in given comments below about the positive fundamentals of the company and I buy these bonds on a hold to duration basis.
Hello,
I got a Primary Bid email on a LINV bond today and ended up here as part of research.
First impressions if it sounds too go to be true it probably is!
What business are they in that they can pay 11.5% and pay out 100% of capital after 3 years?
If I apply for a BTL mortgage say with Nationwide BS as below I get offered 6.19% for 5 years
Initial rate - 6.19%
Initial term - 5 Year Fixed
Follow on rate - 8.99% variable
Product fee -2% of loan
Loan to Value (LTV) - 80%
How can LINV generate enough income to pay 11.5% on a bond and pay shareholder dividends and pay wages and all other costs?
A great overview.
In my opinion, the only thing holding this back is uncertainty over interest rates and the consequent stalling of the property market. Once it's apparent that interest rates have plateaued this will fly. The imminent dividend on its own represents a great short-term return. There was also a great write up about Lendinvest in last month's Angel News. That will surely bring more investors into the property investment portfolio.
Ubervalue, it's a fairly complicated picture, as you might imagine. But here's what I found:
1. There are £200m bonds - these are fixed. 5.3% due this year £100m. 6.5% due 2027 £100m. Suggesting the remainder is floating (but I don't know that for sure)
2. On the lending out - STL (Short Term Lending) is about 25% of LINV's total lending and is a 2 year maximum duration. BTL is the other 75% and is 30 year duration. £0.4bn is long duration Mortimer 2021-1 - this is (post period) off balance sheet.
3. Note 4 of the Annual Report shows assets/liabilities over 6 months, 12 months, 24 months to be broadly equal. The gist of their strategy is (largely) that the STL is on the balance sheet and BTL is off the balance sheet.
4. LINV use interest rate swaps to manage rate rise risk (described in note 4)
5. Defaults actually fell for Y/E 31/3/23 and there is quite extensive analysis in Note 19 speaking to how they determine their provision for bad debt. They use 3 levels of stress and 10 probabilities of default. The forward picture doesn't appear to be severe at least as at year end. They speak of sensitivity analysis to "SICR" (signifcant increase to credit risk) where they consider property prices, interest rates, unemployment and various indices. Under a stress scenario note 19 speaks to a £7.9m sensitivity which would be painful, but actually not all that bad. I notice the auditor signs their provisions for bad debt with a materiality of circa £0.7m.
6. In fact Finncap's forecasts see impairments remaining steady in 2024 (£5.9m); about 40% of 2023's AUM go off balance in 2024 despite overall FuM growing by 20%.
To conclude, I can't find any evidence of an impending "Silicon Valley Bank" scenario - far from it actually. The level of risk and liquidity appears well managed and that even where defaults occur because these are secured loans the 70%ish loan to value means the value of write offs (at least in FY2023) are just a few million. Moreover, because so much of the lending is going off balance sheet these risks are diminishing too.
Agree with your analysis overall Agricore. If I just read the annual report and didn't see the share price I'd guess a P/E of something like 30x, not 6x.
I can only imagine that some in the market believe there's a lot of exposure to defaults buried in there somewhere if house prices collapse / BTL investors can't pay rising rates. I think that's unlikely given the supply / demand situation. The other possible reason is that there's some mismatch between its lending and borrowing, like we have seen with SVB (long duration assets vs short duration borrowing).
Do you know what the duration of their loans is, and what proportion are fixed vs variable? I'm really not sure what's standard in this market.
Been working through some due diligence on this stock. Some points of interest:
1. While there are some negative reviews (aren't there always?) I'm struck by the overwhelming positive from customers/brokers. Read for yourself: https://uk.trustpilot.com/review/lendinvest.com?page=17
The feedback is continually reflecting the "spin" that this is a genuinely useful platform/provider.
2. The share price has been falling - it's now down to 47p. Why? Well, negativity towards the housing sector is the only explanation I can think of. It released great results and has great forecast results. But it's interesting that LINV represent just over 1% of the £250bn bridging/buy to let/complex mortgages/specialist segments and 0% of the £1.1tn home mortgage market. Even if - let's be dramatic - the level of house sales halves in the coming 2 years (i.e. same as the crash in 2008 or for the month of April 2020) LINV only needs to continue growing its market share there's plenty of runway even at depressed levels. It would be different if LINV was Rightmove, but it isn't.
3. What's the value of the IP? There is absolutely no sign of the market ascribing value. To my mind LINV's platform is a little like Cushon which recently sold for £144m (for 85% of the business) valuing it at £169.4m. If anything LINV appears more sophisticated than Cushon but let's say it's worth the same - that's 2.6x the current share price. Watch the tech presentation and judge for yourself:
https://www.equitydevelopment.co.uk/research/lendinvest-technology-investor-presentation-28feb22
4. What about risk of defaults etc? Well there's a maximum LTV of 75% and LINV is rapidly moving loans off the balance sheet. It's moving from 80/20 on balance sheet to 40/60. So defaults appear to be a growing risk but on a shrinking amount and I think it unlikely that BTL rental properties are going to drop >25% when rental yields are so very high (and I can't see this changing because of the severe shortage of rentals)
5. What about the cash generation and profitability? Well this is where it gets baffling. Apart from happy customers, valuable IP, good assets, the business is highly profitable and cash generative. The dividend is nearly 2X covered on reported EPS.
6. Dividend? Yes a 9.68% well-covered and growing dividend. It makes no sense for this share to be 47p. It goes ex dividend on September the 14th with a 3.2p final dividend (6.8% of the current share price)
Finncap recently valued LendInvest at 300p based on 35x FY24 P/E or 22x FY24 EV/EBITDA, and at 49p believe it is undervalued on FY24 P/E of 6x, 4x EV/EBITDA, 33% EFCF yield, and 9% dividend yield.
I keep thinking where's the catch? Or should I instead conclude that in fact LINV *is* a catch.
GLA
Presentation on the FY23 results:
https://vimeo.com/846216179/82b4670dce
Superb result in my opinion:
LendInvest has reported -
1. FY23 AuM growth of +21% to £2.6bn
2. PBT in line with FY23 guidance at £14.3m
3. FY23 DPS of 4.5p.
The group’s revenue disclosure has changed to focus on net operating income instead of gross revenue, and on the new basis, FY23 net revenue increased +8% yoy to £54.7m, with growth of +38% in BTL driving the performance. Through the currently challenging market conditions, management has continued to focus on selectively scaling the platform, and the launch of the specialist homeowner solution in December 2022 was the primary driver of the opex increase that led FY23 adjusted EBITDA to £14.3m. FY23 reported PBT of £14.3m then benefitted from £5.1m of fair value gains on pipeline hedges, and the proposed DPS of 4.5p represents +2% yoy growth.
On a 51p buy seems incredibly good value. TP 300p.
Looking forward to seeing these.
Interest on Liv3 received today
I'm still hearing people say they haven't been paid. Apparently Lendinvest made a payment on the 7th, but the money has got lost in the system. Modern equivalent of the cheque is in the post? So if the money hasn't been credited today LendInvest are now technically in default. Default on a public listed bond, when they have still have the rump of LIV2 due in October. Miserable stuff indeed. It makes you wonder what's going on there.
So, it appears LIV3 investors might still not have been paid. Tomorrow is the last day before the bond falls into default as I understand it. So will they be issuing a notice in the event of default today? If they did, I wouldn't be surprised if LINV didn't test the very lows of last years.
Management playing chicken with the bonds, or is there a deeper cash flow problem hidden away. Didn't the founder recently sell a couple of million quids worth of stock to meet demand....
No nothing yet. This bond interest payment is around £2m. Small fry for a business that has lent £4bn and recently signed a £300m facility with Lloyds.
From a reputation point of view this is poor . I inquired about selling my bonds but was told they are not tradable. If true This would make the lse pricing on liv3 invalid.
So still no payment on LIV 3, that will fall into a default mid week next week.
If there is a major issue then a Creditor Committee can call on an accelerated repayment of the bond, capital and interest and LendInvest has give 20% guarantee. Of c£60 million. Issuers obligation.
If there is a problem then there's been a collapse of expectations within 6 months of issue...it makes you wonder what else might be lurking in the rest of LINV.
Not to mention the fully secured LIV2. Frankly, they are best avoided. This is bad news. It could be very very bad news.
-
A bond that's very recent
Thanks for your posts on this...useful info. No interest for Liv3 has been paid to me as of time of writing.
https://www.lse.co.uk/SharePrice.asp?shareprice=LIV3&share=Lendinvest27
I've seen similar comments on several boards, brokers are chasing the Trustees for the funds...without any success. It might be a storm in tea cup, there are occasional late payers that go up to the wire, but I guess we will know next week.
The optics of it don't look good, but LIV3 is trading around par, well it was yesterday, so who knows.
So Lendinvest appears to have failed to pay the interest on it's ORB (retail) bond on the 8th February. They have 2 weeks from the 8th to pay, after that it's possible for the bond to be considered as "defaulting":
11. Events of Default
If any of the following events (“Events of Default”) occurs and is continuing, the Trustee at its
discretion may, and if so requested by holders of at least one-quarter in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall, subject in each case to it being indemnified and/or secured and/or prefunded to its satisfaction, give notice (an “Acceleration Notice”) to the Issuer that the Notes are, and they shall immediately become, due and payable at their Early Redemption Amount together (if applicable) with accrued interest:
(i) Non-Payment: default is made in the payment of any principal of or interest when due on
any of the Notes and such default continues for a period of 14 days; or
There's a limited guarantee from the parent, but if the cash expected by LIV3 investors isn't received and the bond falls into default, you have to wonder what other covenants might be triggered? So a default would trigger an EGM and potentially the guarantee to be called upon and the acceleration of the due date. That's a hit for LINV and a fire sale.
This appears to be the first due payment on the bond and Lendinvest appears not to have made it - when you look through forums there some chatter about it. I was watching the stock before the rally, I'm now sort of glad I've sat on the sidelines. It may be just a glitch, but an unfortunate one. It doesn't look good when a company fails to pay within a few days.