Hedge fund manager Marshall Wace is seeking subscriptions to a new peer-to-peer (P2P) lending fund with a target of £200 million, in a move to capitalise on the trend away from traditional bank finance to P2P lending platforms.
The announcement follows the group's acquisition last month of P2P specialist Eaglewood Capital Management, a New York firm controlling about $213 million (£126.5 million), which vets and posts loan requests by individuals that are then funded collectively. Eaglewood has been among the first to start securitising these loans, and recently completed a $47 million increase to a $53 million securitisation.
P2P Global Investors, to be structured as a UK investment trust, will invest both in Eaglewood's Income Fund and in loans through a variety of P2P platforms, diversifying across asset class types and the equity of growth companies. It plans to list on the main market of the London Stock Exchange by end May.
'Peer-to-peer lending has the potential to transform consumer and small and medium enterprise lending practices worldwide by disintermediating the banks,' Marshall Wace co-founder Ian Wace said at the time.
Traditional banks are now forced to hold higher levels of capital following tighter regulation in the wake of the financial crisis, and cannot efficiently operate at the smaller end of the market. P2P lending platforms connect borrowers with lenders online, providing cheaper finance than banks and at lower risk as the loans are not taken onto their balance sheets.
P2P Global Investors will invest in loans that yield between 5-15 per cent a year, and have a target yield of at least 6-8 per cent through a quarterly dividend. The trust will distribute 85 per cent or more of distributable income, while retaining the option of investing up to 5 per cent of its net asset value in P2P lending platforms.
Marshall Wace, which manages $18 billion of assets, has been an early mover in this arena. Many more of P2P ventures will be listed as they supplant bank finance. For example, Lending Club, the $3.75 billion US P2P platform, is currently preparing for an IPO.
UK research group NESTA estimates that £12.3 billion-plus was lent through P2P in 2013, a level expected to soar in 2014.
Eaglewood was founded by Jonathan Barlow, a 35-year-old Lehman alumnus who retains his incentive through a minority ownership stake. 'P2P Global Investments is to be the first UK-listed company dedicated to investing in loans originated by leading peer-to-peer and online lending platforms worldwide,' comments Barlow.
'By conducting rigorous platform due diligence and deploying the robust portfolio and risk management processes of our investment manager, our objective is to provide permanent funding to the sector while also offering the potential for capital growth and an attractive dividend income to investors.'