UK P2P platforms swing into the black
P2P lenders have raised £1.85bn over the last five years, with more firms moving into profit, as Selin Bucak reports…
As businesses across the UK brace themselves for a deeper recession, peer-to-peer lenders seem to be doing well with eight out of the 10 largest companies based on cumulative lending now reporting profits.
Only two continue to be loss-making. The rise of P2P lending has also caught investors’ attention, with alternative lending business raising $4.7bn (£3.8bn) globally across 176 deals in just the second quarter of this year, according to a PitchBook report.
In the UK, over the last five years, P2P lending platforms have raised £1.85bn in capital.
Last year, such businesses raised a total of £326m, down from £786m in 2021. However, 2021 was a record year for many parts of venture capital which some have argued has distorted figures. In 2019, the year before Covid-19, P2P lending platforms raised £150m in the UK.
Here we take a look at where 10 of these businesses stand in terms of profitability and the capital they raised as they prepare to enter a new year filled with significant economic challenges.
Assetz Capital
- Founded: 2013
- Capital Raised: Nearly £60m (according to Dealroom)
- Cumulative Lending: £1.5bn
- Interest paid to investors: Over £100m (gross)
Assetz Capital posted a profit of £2.1m in the year ended 31 March 2021, according to the group’s latest set of accounts published on Companies House. This was up from a loss of £800,000 the previous year.
The platform has raised fresh equity in the past year to support its growth plans. In August 2022, it raised £296,258 from investors on Seedrs. This followed the firm’s last crowdfunding round, which was matched by the government’s Future Fund, bringing the total to just over £1.5m.
Assetz announced last month that it was winding down its retail investment book over the next five years, as it pivots away from its P2P lending roots to becoming a purely institutionally-funded lender.
Folk2Folk
- Founded: 2013
- Capital Raised: Nearly £14.5m in credit (according to Dealroom)
- Cumulative Lending: £573m
Folk2Folk registered a profit of £1.97m over the year ending 31 January 2022, up from £1.11m year-on-year. Over the period it also paid out its first dividend to shareholders.
The group’s managing director, Roy Warren, previously said that it has ambitious growth plans. In November 2021, the firm announced that it had secured a £7m funding line from the investment arm of the British Business Bank.
Read more: Folk2Folk reports rising loan values
“The addition of British Business Investments as an institutional investor alongside our existing investor base, expands our funding lines and bolsters our position on the financial frontline of support for regional small-and medium-sized enterprises (SMEs),” said Warren at the time.
CrowdProperty
- Founded: 2014
- Capital Raised: £5.2m (according to Dealroom)
- Cumulative Lending: £271m
- Capital Repaid: £164.1m
CrowdProperty returned an operating profit of £147,035 during the 2021/22 financial year. The platform said that it expects to post another profit next year.
In 2021, the group raised £1.8m in equity capital to support investment into its technology, systems, processes, team and brand.
Over the past year, CrowdProperty has been on a hiring spree, adding in several roles including a head of planning and a new lending director. Meanwhile, the firm launched a new mezzanine finance product called CP Capital.
Kuflink
- Founded: 2016
- Capital Raised: N/A
- Cumulative Lending: £237.6m
- Capital Repaid: £141m
Kuflink almost doubled its profits in 2022 following a “record” year of lending. During the 12 months ending 30 June 2022, the Kuflink Group reported a post-tax profit of £729,122, up from £462,555 the previous year.
By 2026, the company expects to have a turnover of £37m and profits of £11m.
Invest & Fund
- Founded: 2015
- Capital Raised: N/A
- Cumulative Lending: £200m+
- Capital Repaid: £120m+
Invest & Fund is still lossmaking but has been able to reduce its post-tax losses significantly from £1.1m in the 12 months to 31 March 2021, to just £295,000 this year. In addition, it posted an increase of more than 300 per cent in revenue to £1.4m. Over the period, the business also recorded its first month of profitability, according to its latest set of results.
These results followed several structural changes in the business, including the recruitment of specialist executives into key roles.
Invest & Fund has received capital from the government’s Future Fund.
Proplend
- Founded: 2014
- Capital Raised: N/A
- Cumulative Lending: £178m
- Capital Repaid: £118m
- Interest paid to investors: £19.5m
Proplend’s results for 2021 do not include an income statement, however, chief executive Brian Bartaby told Peer2Peer Finance News the business is profitable. He added that the group remains sustainable as they “run a very tight ship”.
He added: “We have income backed into the current loan book and a loyal supporting of lenders who fund new loans as they come to the platform.”
Proplend depends on continued financing from its shareholders, who, according to its latest set of results, confirmed that sufficient funds will continue to be made available and agreed that no withdrawal will be taken from the business. It has previously held a crowdfunding campaign on Seedrs, raising £637,000. In 2017, Salamanca Group announced the completion of a series A funding for Proplend.
Bartaby said the firm might look to raise additional external capital in 2023.
ArchOver
- Founded: 2013
- Capital Raised: N/A
- Cumulative Lending: £161.6m
In 2021, ArchOver posted a loss of £648,579, which was up from a loss of £534,996 the previous year. A review by Neil Faulkner, head of research at P2P ratings firm 4thWay, suggests that the business is still some years away from becoming profitable. However, Faulkner believes it is nevertheless a sound business.
ArchOver has not raised any external capital, but it is owned by Hampden, a much larger company, which provides specialist insurance. And according to ArchOver’s latest set of results, it received continued financial support from its shareholders.
ArchOver announced earlier this month it is exiting the peer-to-peer lending market and will not be accepting any new retail lenders to its platform, blaming costs and regulation, as well as ongoing economic volatility for the decision.
HNW Lending
- Founded: 2012
- Capital Raised: N/A
- Cumulative Lending: £115m
This year has been the second highest profit year for HNW Lending, according to its chief executive Ben Shaw, who did not share an exact figure with Peer2Peer Finance News. But according to abridged accounts for the year to 31 March, HNW Lending posted a profit of £71,122, down from £89,924, the previous year. Shaw said this figure is shown after appropriations have been made, such as dividend payments. In fact, he said, the profit is much higher than what is shown on the accounts.
Relendex
- Founded: 2013
- Capital Raised: £5.77m (according to PitchBook)
- Cumulative Lending: £99.9m
Last year, Relendex reported its second consecutive year of profits, making £322,998, up from a profit of £135,760 the previous year. Although the group’s results for 2022 are not published yet, executive chairman Paul Sonabend said earlier this year that Relendex is well capitalised and growing at a pace that is sustainable.
According to PitchBook data, the last time the company raised capital was in 2018, from angel investors. According to its results published in June, Relendex is actively engaged in raising new equity and other financing to fund its development. During 2021, it issued £500,000 in new equity capital, which it said provides sufficient finance for the company’s requirements for the foreseeable future.
LendingCrowd
- Founded: 2014
- Capital Raised: £109m (according to PitchBook)
- Cumulative Lending: £136m
LendingCrowd’s accounts for 2021, published in September 2022, show a pre-tax profit of £29,059.
At the beginning of the year, the platform closed a £100m funding deal with Barclays Bank and a large global investment firm to scale up its lending to SMEs.
Editor’s note: This article was published in the January issue of Peer2Peer Finance News and figures have been updated for publication online.