Equitivo has partnered with Ablrate to grow the latter’s blockchain-enabled secondary market for trading marketplace loans.
Poynton, UK-based Equitivo, a fintech consulting firm, is working with Oxon, UK-based Ablrate, a peer-to-peer asset-based lender, will aim to help the blockchain platform, ASMX, to grow at a quicker pace. It will initially be aimed at retail investors, but a version targeting institutional investors and brokerage houses is in the offing.
The loans will be between £100,000 ($130,398; €115,025) and £1.5 million, Equitivo chief executive Andrew Holgate said, noting they would trade in denominations of £100-£500. The loans will be bilateral, between the corporate borrower and its investors, often whom are retail.
Blockchain offers a secure place to record transactions and keep accounting records, SGG’s Stuart Pinnington wrote in Private Debt Investor sister publication pfm.
“The pain point was settlement for different loans,” ASMX chief executive David Bradley-Ward said, explaining traditional legal settlements can be expensive. “With blockchain, we can do it in a cost-effective way, for a fraction of the cost [of traditional settlements].”
Marketplace lending has grown in recent years, but investor access has remained fragmented for a lack of centralisation.
“There seems to be a number of solutions coming forward as to how this problem can be solved,” Holgate explained in an interview, referring to the problem marketplace loan investors face of having to use multiple investment portals.
“The solution thus far has been aggregation with one platform accessing many,” he added in an email. “This is a problem for businesses that may feel they are giving up the lender base, ASMX allows users to stay on their favourite platform and access all other connected platforms, without having to sign up anywhere else.”
ASMX aims to offer benefits to the loan’s originators in addition to making the asset class more user friendly for retail investors.
The platform will provide liquidity for marketplace loan originators, Bradley-Ward said, allowing firms to connect their disparate software and access a broader investor base, as traditional costs of accessing retail investors can also be quite high.
Some private equity firms have adopted for fund administration, such as Geneva-based Unigestion, which worked with Northern Trust and IBM on the project, PDI reported early last year.
“Private equity transactions are complicated, involving numerous investors and a large number of documents to be transferred to stakeholders. The blockchain can automate this process and remove the paper trail,” Justin Chapman, global head of market advocacy and innovation research at Northern Trust, told PDI at the time.