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Exclusive: ESO establishing marketplace lending platform

ESO Capital will initially build the strategy around its tie-up with marketplace lender ThinCats and plans to expand into both other jurisdictions and types of lending.

London-based lower mid-market focused debt provider, ESO Capital is setting up a new permanent capital vehicle on which it will build a wholesale marketplace lending platform, ESO chief executive Alex Schmid told PDI. The new limited liability company will be backed by capital provided by ESO’s existing investors, he added.

The new vehicle will not be publicly listed and will initially invest in loans originated by UK-based ThinCats, a secured small- to medium-sized enterprise (SME) lender. ThinCats’ strategy is similar to ESO’s existing focus but makes smaller loans to borrowers that fall under the firm’s current lending threshold.

Schmid says that the strategy will grow organically supported by some potential acquisitions. The platform could eventually be listed, he explained, but the focus for the moment is building a diversified platform of lenders with opportunities outside the UK and beyond the firm’s current lower mid-market focus. Establishing a strong loan book that allows the new speciality finance corporation to take market share from other lenders is top of the agenda. ESO is already examining opportunities for growing the platform in the UK and the rest of Europe.

In February, ThinCats announced that it had signed a £50 million ($79 million; €70.35 million) underwriting deal with ESO whereby the firm would underwrite a series of large loans originated by the platform. The deal was designed to give more surety of execution for larger loans put up for auction by ThinCats, but also to boost the size and number of deals the firm could do. As part of the agreement, ESO retained the right to control the recovery process in the case of default on a loan it has invested in. 

ESO Capital Group was founded in 2006 and has offices in London and Zurich. It focuses on acquiring distressed assets and financing SMEs with liquidity constraints caused by high growth as well as insolvency situations.