Friday 14 December 2018

Flender targets institutions for €50m loan boost

Peer-to-peer lender wants to raise the amount of capital offered on online platform

Jeremy Davies Betancourt, Kristjan Koik and Oli Cavanagh of Flender
Jeremy Davies Betancourt, Kristjan Koik and Oli Cavanagh of Flender
Gavin McLoughlin

Gavin McLoughlin

Peer-to-peer lender Flender is in the process of raising a €50m debt package to boost lending on its site, and is in talks with a number of Irish and international institutions about participation in the deal.

PwC is on board to lead the fundraising round, and the company hopes to secure agreements with institutions for the rest. Chief executive Kristjan Koik said the company's ultimate aim is to list on the stock market in three or four years' time. The fundraising process is designed to fuel lending on the company's lending platform. Flender is also halfway through an equity raise of around €2m.

"What we would like to have is institutional partners that provide debt to us at cheaper rates than we are getting now, bringing the cost of funds down which we can pass on to the borrowers, and getting more deals funded quicker," Koik told the Sunday Independent.

The company's platform connects companies seeking to raise money with individuals who want to lend and receive a return. Koik said he would not allow institutions to fund 100pc of any deal, setting a maximum of 85pc.

"We want borrowers, friends, family, more customers, to be able to participate together to create more loyalty," Koik said. He said the debt package, which it would seek to draw down in two tranches, would enable the company to fund deals for the next 18 months.

The company is also looking to launch a property finance arm. "There's been huge demand for borrowers and lenders looking for that product. Our target market would be deals between €250,000 and €500,000. These would be builders and developers who require extra capital to finish off their property development. It wouldn't be for somebody who has bought a site and may or may not get planning."

Koik said he had been surprised at banks' willingness to work with Flender. "When we first launched we thought banks might not like us because we could be taking away their customers. But the way the market is going - and actually within Europe as well - is that banks like to partner with a peer-to-peer finance provider.

"They usually take a view that says: 'you guys actually might be doing the SME part better than us. You do it quicker, there's a value add'," he said.

"But then the banks say: 'but we do mortgages better than you so once those clients are ready to take some other credit product that you guys don't provide, please refer them back to us'."

Koik cited the example of Funding Circle as a peer-to-peer lender seeking to go public. Last month the company picked Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley and Numis to help manage its initial public offering, according to Bloomberg. Funding Circle - London's biggest peer-to-peer lender -has arranged more than £4bn in loans for SMEs in the UK, US, Germany and the Netherlands.

Sunday Indo Business

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