Mainstream Seeks To Put Their AltFi Investments In Order – Plus Loan Latest

Maturity and balance are slowly coming to mainstream finance, following the headlong rush by big investors to get into the alternative finance sector.

Approximately £85m of Honeycomb Investment Trust’s stock was sold [on Monday], as investors took advantage of a share buy-back programme which valued the trust at 850p per share – a 16 per cent discount to December’s net asset value of 1014.9p.

The sell-off represents approximately one quarter of the fund’s portfolio. While the company has announced that it will buy back up to 2.2 million shares, brokerage Numis has reported that approximately 10 million shares had been sold by the end of trading last night.

“The announcement essentially gives the company time to seek to place out the stakes held by selling shareholders,” said Numis research. “The placing will inevitability attract value investors and depending on the nature of buyers it is likely to bring the future of the fund into question.

“A potential catalyst for value investors has recently been removed after the continuation vote, due in 2021, was brought forward to December 2019. Shareholders approved continuation, although clearly had an eye on a different exit mechanism, rather than a protracted wind-down.”

Numis analysts have pointed out that Honeycomb has “an extremely concentrated shareholder register”, with the three largest holders representing approximately 75 per cent of share capital.

The largest shareholders, according to Bloomberg, are Invesco with a 36 per cent stake and Old Mutual with 23 per cent, as well as Link (funds previously managed by Woodford Investment Management) which had an 18 per cent stake, prior to yesterday’s announcements.

Loan Offer Latest

Yes You Can, rated B, for £30,000 with an 11 per cent fixed yield, is currently 24 per cent subscribed. More loan offerings will land on site soon.

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 £19 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 one bad debt 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.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.