AltFi Acquisitions Continue As Latest AltFi Platform Is Snapped Up
Regular visitors to our News section will be up to speed with our reports on the convergence between mainstream finance and the alternative-finance sector. Acquisition by mainstream players is currently the dominant theme here. The latest news comes from consumer-focused alternative lending platform Lending Works, which has been acquired by asset manager Intriva Capital.
The deal sees Intriva take full control of Lending Works, subject to regulatory approval. The firm says it has further committed to providing “significant additional funding and capital” to support the growth of the business. This will allow expansion of the business in the coming years.
Lending Works has previously raised money from UK-based private equity house Maven Capital Partners, Pollen Street Capital and NVM Private Equity.
The firm, which suspended the use of its secondary market and stopped access to retail investor funded loans in April, was launched in 2014. Lending Works has lent almost £250m to date.
Nicholas Harding, founder and chief executive officer of Lending Works, will continue to lead the business, alongside the existing management team. The intention is for some of Intriva’s team, including Simon Finn, Intriva Capital’s Managing Partner, to join Lending Works’ board as non-executive directors.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
- Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.