Wednesday 21 November 2018

Future Finance booked loss on loans sale

Dublin-based student loan specialist Future Finance cut the size of its loan book by €44m last year. Stock Image
Dublin-based student loan specialist Future Finance cut the size of its loan book by €44m last year. Stock Image

Gretchen Friemann

Dublin-based student loan specialist Future Finance cut the size of its loan book by €44m last year, after offloading a portfolio at the end of November.

The firm - which lends money to more than 7,000 university students in the UK and Germany but is yet to establish a lending operation in Ireland - recently signed a £100m (€113m) debt facility with alternative asset management firm, Waterfall Asset Management.

According to recently filed accounts for Future Finance, the deal was struck in December and may be increased to £200m. The facility has a term of five years and is aimed at funding the growth of the firm's loan portfolio.

Future Finance opted to sell loans last year in order to repay funds secured in 2015, but the disposal deal crystallised a €4.5m loss as the portfolio's carrying value of €63m was some distance from the sale price of €56.9m, accounts show.

However, the accounts highlight that overall the loan portfolio of the group rose by 31pc in the year ending December 31, 2017 but the scale of the expansion has slowed since 2016.

The financial documents attribute this 47pc decrease in year-on-year growth to the firm's decision to concentrate on "other strategic priorities of product and technology transformation".

Future Finance - which was established by entrepreneur Brian Norton, who relocated from Chicago to Ireland in 2013 to set up the business - also took a €2.2m hit for breaches of the UK Consumer Credit Act, the accounts show.

The filing states that all affected customers were compensated "either in the form of credits to their outstanding balance or cash payments".

Future Finance, which is led by consumer lending expert, Alex King, stressed in its financial notes that the group's earnings depend "primarily on continued growth in the UK loan portfolio", but said it continues to weigh opportunities to expand into new markets.

The company previously told the Irish Independent that it planned to gain regulatory approval from the Central Bank here to lend in Ireland.

Early backers of Future Finance include US venture capital heavyweight Mark Stevens - who oversaw early-stage investments in firms such as Google and PayPal - and Goldman Sachs, an early lender to the business.

Mr Stevens' Silicon Valley-based venture capital firm, S:Cubed, invested €2m in Future Finance.

A billionaire, Mr Stevens was a partner at high-profile US venture capital firm Sequoia Capital when it invested in companies including Google, PayPal, YouTube and LinkedIn.

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