LONDON (Alliance News) - P2P Global Investments PLC has raised GBP400 million by issuing 40.0 million new C shares, with the aim of growing the company and making investments in instruments such as peer-to-peer loans.
Peer-to-peer lending has been gaining traction since the financial crisis of 2007-09, emerging as a serious alternative for borrowers seeking an alternative to bank loans. Lenders and borrowers are matched in the industry by platforms, which challenge bank lenders that have become increasingly constrained by tougher capital requirements since the crisis.
A company like P2P Global Investments tries to generate returns for shareholders by investing in loans originated by a platform. Currently, P2P Global and investment manager Eaglewood Europe LLP have agreements with a number of peer-to-peer lending platforms, including Funding Circle (UK), RateSetter, and Zopa in the UK, as well as Lending Club, Prosper and Upstart in the US.
According to the Peer-to-Peer Finance Association, which was established by Zopa, FundingCircle and RateSetter to promote the sector in the UK, platforms provided GBP507.3 million of new consumer and small business loans in the second quarter of 2015, taking cumulative lending by its members to GBP3.15 billion.
P2P Global has fully invested the GBP200 million it raised by selling ordinary shares when it listed in London in May 2014, as well as about 90% of the GBP250 million it raised under its first issue of C shares in January. A further GBP21.5 million was raised by issuing ordinary shares in June, the month before its existing C shares were converted into ordinary shares.
"When we launched the trust in June last year we pioneered the idea of a listed vehicle giving diversified access to a range of leading peer to peer platforms around the world. Since then, we have expanded significantly and the trust is now delivering a strong income return to our investors, as well as accumulating equity in a number of the platforms with whom we have relationships," Simon Champ, chief executive of Eaglewood Europe, the investment manager, said in a statement.
"We received widespread support from both new and existing shareholders and the additional capital raised here will enable us to further benefit from economies of scale and the ever growing opportunity driven by this disruptive technology," Champ said.
Simon Champ's experience in banking goes back about 20 years, including stints at Dresdner Kleinwort and JP Morgan Cazenove and as one of the founders of London-based Liberum Capital, which alongside JPMorgan is a joint corporate broker to P2P Global.
In a note sent to clients on Friday, Liberum Capital's alternative funds research team said the C share issue was an "important milestone" for P2P Global, cementing its position as the "largest permanent capital investor" in the sector.
Liberum said it thinks the issue will deliver a number of benefits to P2P shareholders, including allowing it to "attract and negotiate more favourable terms with the platforms, lower the cost of debt financing, improve cost efficiencies and increase the potential return from equity investments." Liberum retained a Buy rating on the stock. Liberum Capital acted with JP Morgan Cazenove as joint bookrunner on the placing.
P2P Global Investments ordinary shares were trading up 0.4% at 1,079.5 pence on Friday at around midday in London.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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