Company focus: Kuflink

Kuflink’s journey into peer-to-peer lending has been different to most of its competitors. It started life in 2011 as a bridging and development lender with a highly specialised team of property experts and risk analysts.

Five years later, Kuflink opted to enter the world of P2P with a very simple remit – to fund UK properties while providing competitive returns to investors.

“Effectively, what we’re doing is we’re just putting opportunities on the platform which meet our lending criteria and eligibility criteria,” explains Narinder Khattoare (pictured), chief executive of Kuflink.

“We were already lending money as a bridge and development lender prior to going into P2P. So the team that we have here is a very experienced team of people who can underwrite deals, who know how to sit on credit committees and make decisions who understand property, who understand planning permission with local councils.”

Read more: Kuflink loan collections almost doubled in Q2

As a P2P lender, Kuflink knew that it wanted to focus on transparency and fairness for investors and borrowers alike. From the very beginning, the platform has engaged with investors on every issue, and it has acted quickly to enact any changes based on investor feedback.

For example, earlier this year a number of investors had queried why they were not earning additional interest on loans which had had their term times extended. Kuflink agreed, and investors will now earn a premium on extended loans.

“The thing that differentiates us is that we always listen to our investors,” says Khattoare. “We listen to what people say on the forums. We listen to the feedback that we get directly. And you’ll see that from Trustpilot as well. A lot of our investors have commented to say thank you.”

Kuflink made the choice to move into the P2P sector in order to expand its user base to include those retail investors who were typically excluded from higher-value bridging and development deals. With a minimum investment of £1,000, the average Kuflink investor can back a multitude of property deals, targeting returns in excess of nine per cent per annum.

Read more: Kuflink secures £35m debt facility from Paragon Bank

Today, Kuflink’s investors range from high-net-worth and ultra-high-net-worth individuals, to family offices, to retail. The platform’s key investors have an average income of between £80,000 and £100,000 per year. They are not risk averse, and they want to diversify their investment portfolio.

“On our platform, there are always regular investments available for investors,” says Khattoare.

“Our investors understand property because some of these guys are developers, investors themselves into property. They’ve got portfolios, so they are landlords too.”

Approximately 15 to 20 per cent of the platform’s investors are classified as retail, and while some P2P platforms have opted to move away from the retail market in response to increased regulation from the Financial Conduct Authority (FCA), Kuflink has been adamant that it will continue to serve its retail base.

“We’re very much still committed to retail,” says Kuflink. “We’re not going to walk away from the market. There’s always going to be a product available for our retail investors. We’ve spent far too much time and energy building the platform, acquiring those 27,000-odd retail investors that we have on the platform. The cost per acquisition hasn’t been cheap on that side. So there will always be a product available for these guys going forward. We’re never going to shut that side of the platform down.”

An active secondary market provides liquidity for these retail investors, while the Innovative Finance ISA (IFISA) wrapper allows retail lenders to protect their earnings from taxation. In addition to this, Kuflink maintains an outreach programme which involves surveying investors on their needs, and educating them on the risks and rewards of P2P.

The company puts up to five per cent of its own money into select deals, to offer additional reassurance for retail investors. When a change is being made to the platform’s operations, investors are the first to hear about it.

“We’re very open and transparent,” Khattoare says. “No one’s lost any money on our platform. I’m not saying we are the best because there’s a number of other platforms that are doing great jobs and long may that continue, but we’re performing well.

“However, we want the entire sector to be doing well, because it makes life easier for us. It makes life easier for investors. And maybe the regulator will look at it and think well, you know what, this is actually quite a good industry because you’ve got a number of platforms that are performing.”

Khattoare believes that P2P lending is “an industry which is ahead of its time”, which is still not fully understood by the FCA.

As a result of the regulator’s ban on financial incentives such as refer-a-friend, the platform has had to rethink its customer acquisition strategy. When the platform first launched, it made a huge marketing push, sponsoring a local football team and advertising on TV and radio. Now, marketing is done much more carefully, with visible risk warnings and increased outreach.

Next, the platform is considering a number of new products, including a business loan and an unsecured lending product. The platform is also open to a potential initial public offering (IPO).

“We’ve got aggressive plans for the business,” says Khattoare. “By 2025 we want to achieve a certain target in terms of loan book value and the number of loans we have on the books, as well as our profitability as a business.

“The forecast looks very attractive for us, but I want to make even more attractive for investors so they can look at us and look at our financial accounts and see a profitable, growing business.

“Everything’s on the table right for discussion,” adds Khattoare. “By 2025, it could be a potential IPO or a trade sale or something along those kind of lines. It’s something that we will definitely look at, but the only way we can get there is to keep driving profitability within the business.”