LendInvest set to debut on London Stock Exchange

LendInvest is set to become the first peer-to-peer platform in the UK to list on the stock exchange in a sign the alternative finance sector is maturing.

The P2P platform, which claims to be the world’s largest mortgage crowdfunding marketplace, is aiming to float on the London Stock Exchange in the next year and plans on expanding into residential mortgages.

The move comes after two US platforms Lending Club and OnDeck made their debuts on the public markets at the end of last year. Lending Club was valued at nearly $9bn after shares rocketed 60 per cent on the first day of trading.

Banks are starting to collaborate with the fast growing P2P sector. Société Générale and Goldman Sachs are in talks about plans to back Aztec Money, a new peer-to-peer financing platform where people can bid for company invoices.

Christian Faes, chief executive of LendInvest, said listing would provide a seal of approval, raise awareness and help fuel the platform’s next growth phase into the residential mortgage market.

“We are going through the process of getting LendInvest ready for a public market listing,” he said. “We feel that one of the core principles of peer-to-peer lending is transparency, and so operating as a public company is something that we are working towards.”

LendInvest focuses on buy-to-let investors in need of short-term finance. The online platform is able to deliver this quickly, whereas high street banks take much longer and often find it uneconomical to make such loans.

The platform generated about £2.5m in profit before tax last year, and has grown organically by retaining earnings, without the backing of venture capital or external funding.

“In due course, residential lending is where we want to expand,” he added.

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Mr Faes expects the platform to lend more than £250m this calendar year, with turnover of more than £20m.

Cormac Leech, an analyst at broker Liberum, said that although most platforms had strong revenue growth, many were lossmaking. In contrast, LendInvest is profitable due to carving a niche within a high-margin sector, he said.

“LendInvest is one of the fastest growing P2P platforms in the UK and has one of the highest profit margins among platforms globally,” he said. He noted that Lending Club’s shares have declined since the initial public offering to below the price at which they listed at nearly $25, reflecting how “a little bit of realism” is creeping in.

However, Mr Leech said: “Listing means you get quite a lot of free advertising and branding, which makes it easier to acquire borrowers and lenders. So the cost of customer acquisition comes down, as does the cost of capital. Once you’re listed, investors tend to view you as lower risk.”

The platform is also appointing Paul Jeffery, former Credit Suisse banker as chief financial officer and head of strategy, to spearhead preparation for listing on the public markets.