Victory Park investing £150m in UK P2P lender

The partnership will allow UK-based secured business lender, Assetz to charge its growth.

Victory Park Capital will invest up to £150 million ($226.9 million; €195.9 million) in UK peer-to-peer business lender, Assetz Capital, it was announced today (21 January). The cash will help Assetz grow its average monthly lending total from between £10 million and £20 million a month to around £50 million a month by the end of the year, Assetz founder Stuart Law told PDI.

Lack of capital has restricted how many loans the platform can originate, said Law.

The tie-up is the second such substantial investment by a US investor in a UK-based marketplace lender with a business focus. In December, Funding Circle announced that US hedge fund KLS Diversified Asset Management would invest £132 million in its platform and was planning to securitise the loans.

Law says that Victory Park does not plan to repackage and sell-on the assets it invests in via Assetz.

But the US firm may opt to leverage its investment vehicle.

Victory Park were not available to comment ahead of press time.

“Given Assetz Capital’s success to date, its experienced management team, and our expertise in the specialty finance industry, we believe Assetz Capital will be well positioned to achieve substantial growth over time,” said Gordon Watson, principal at VPC in a statement.

The US firm will invest in whole loans with an average size of £750,000 and an average tenor of three years. Assetz typically lends three and five year term loans to business owners.

The facilities are typically secured by assets as well as a personal guarantee by the owner. Security varies but the firm focuses on relatively liquid assets including property and machinery. Though the loans are secured, Law said Assetz takes a very cautious approach to lending, offering cashflow loans that meet affordability checks.

Though Assetz has had defaulting borrowers, its loss rate is zero, continued Law.

The whole loans will be allocated to VPC on a randomised basis by Assetz.

Future partnerships

The platform has capacity for further investment agreements with institutional investors, said Law, explaining that the firm is in active discussions with more than a dozen firms. He added it doesn’t want to be dominated by a single firm or investor type, and intends to maintain its retail investor relationships.

Several US marketplace lenders signed exclusive partnerships with a number of institutional investors and have found themselves overly restricted as they’ve grown in scale, he said. The investment agreement between VPC and Assetz has a five-year lifespan.

Assetz Capital is on the cusp of announcing more partnerships, including with a bank, Law added.

Since inception in 2013, Assetz Capital has made over 100 loans, totalling more than £55 million.

Victory Park Capital is an alternative investment advisor specialising in mid-market credit and private equity investments. Chicago-headquartered Victory Park was founded in 2007.