Alternative lender launches bond on London Stock Exchange

BI Intelligence

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The UK-based alt lender, which specializes in property loans, has listed a £50 million ($65 million) retail bond on the London Stock Exchange (LSE), the first to be offered by a fintech. Retail bonds are available to anyone with access to the stock exchange in question, and can be traded like shares.

The move is a continuation of LendInvest’s transformation from peer-to-peer (P2P) lender to a provider of property-backed investment funds.

LendInvest’s latest move gives it a couple of advantages:

• Exposure to retail investors. LendInvest barred non-financially sophisticated retail investors from its platform back in May, likely to avoid any incoming legislation resulting from regulators’ ongoing concern over consumer use of alt lending platforms. But retail investors are valuable to alt lenders, as they tend to be more loyal, and happier with lower returns, than institutional investors. LendInvest’s new bond will return it access to these investors’ funds, but via a more established structure with better customer protections, according to CEO Christian Faes.
• Another way to attract institutional capital. In addition to bringing retail investors back into the fold, the bond has proven popular with large institutional investors, according to Faes. That’s likely because it offers a fixed return for a set number of years, and as long as LendInvest remains in business for the term of the bond, investors will get their original investment back. The broader the range of investment channels an alt lender offers, the more likely it is to attract the capital it needs from these established players to continue originating loans.

LendInvest is bolstering its business during a turbulent time in the UK property market. LendInvest’s loans are secured against property, a market that has stuttered recently due political uncertainty, something the company acknowledged in its 2017 annual report. The bond should bolster LendInvest's flow of capital, helping it to progress toward strategic goals like developing new products, despite the ongoing upheaval. The firm’s aim is to be in a stronger position once conditions return to normal, enabling it to originate more loans, faster, according to the annual report. But LendInvest is gambling that the property market will return to pre-Brexit strengths, which seems increasingly unlikely considering the continuing turmoil. If the market doesn’t recover, LendInvest could find itself in a worse position having issued the bond.

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