It’s a time of change at ThinCats Australia, with considerations of an IPO and updates to its commission structure reported in the last few days. The IPO is being considered amongst other options that include a private placement or a direct trade investment as the group seeks to raise capital to enhance its growth. This marks an impressive step for a company that made its first loan in December 2014. Its changing commission structure is aimed to better incentivise the brokers ThinCats deals with, and improve the relationship that ThinCats has with them.
The Australian SME marketplace lending industry is growing rapidly. When AltFi News caught up with ThinCats Australia in December 2014, ThinCats was the only game in town. In the past 6 months, however, three new SME lending platforms have sprung up, Kikka Capital, OnDeck, the publicly listed US platform and Spotcap.
AltFi News caught up with Sunil Aranha, CEO of ThinCats Australia, to get an update on the platform, their growth plans and their take on the Australian market, which Morgan Stanley project to reach $22 billion by 2020.
ThinCats Australia is an offshoot of ThinCats in the UK, who own a 25% stake. The synergies between the two businesses are obvious to spot. Sunil explained:
“As JV partners we communicate regularly via a monthly/ six weekly meeting on various matters that include, market trends, technology, marketing, member interest and cross sell potential.”
Sunil did stress that there were significant differences between the two, however:
“We operate under Australian Financial Regulation and a point of difference is that we have our own in house Credit department/ Chief Risk Officer to evaluate eligibility of loans prior to listing on our platform”
When asked about their company growth expectations, and how their funding options fit into this, Sunil remarked:
“We are considering an IPO amongst various other funding options, including a trade placement to support our forecast growth and intention to capture a relevant share of an estimate d$12-15 billion market.”
Sunil also said that, helped by this external funding, he expects ThinCats Australia to grow:
“Exponentially, to mirror the global and local growth trajectory across the P2P/P2B market place”
ThinCats’ consideration of several fundraising techniques demonstrates an awareness that investors are not just important for their capital, but also for their expertise. When AltFi asked Sunil on how the decision would be made, he told us that:
“The key consideration is to optimise an alliance that enables us to partner with groups across many difference areas that include, access to SME borrowers, High Net worth lenders, technology and marketing capabilities and strategic expertise in addition to capital.”
As part of their ongoing expansion, ThinCats Australia has identified a better suited incentive scheme for brokers that partner with them. Under the old scheme, ThinCats would pay 25 basis points for a lead settlement (without a fully completed application) and a trail commission of 15 basis points. Their new plan offers 60 basis points for a lead with a fully completed application and keeps the trail commission of 15 basis points. On top of this, there will be no clawbacks and ThinCats Australia will not penalise borrowers that want to repay their loans back early.
Sunil remarked: “we are keen to develop our relationship with brokers and believe our commission structure will attract more of them to our platform”
With ThinCats Australia’s relative youth, the fact that the platform is publicly mulling an IPO certainly underlines its ambition. The Australian SME marketplace lending space is certainly an area to keep an eye on.
21 March 2023
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