New NZ Platform Poised for Launch

By Ryan Weeks on Tuesday 11 August 2015

Alternative Lending

There’s a new player in New Zealand’s nascent P2P lending market.

Squirrel Mortgages is poised to launch a peer-to-peer consumer lending offering, having become the third platform in the region to secure a P2P license from the Financial Markets Authority (FMA). Squirrel’s platform is likely to become the market's second-mover, with a launch planned for the first week of September. The incumbent is rival consumer lending service Harmoney, which has been live since July 2014. LendMe also holds a P2P license, but it’s unclear when the platform plans to launch.

Squirrel Mortgages MD John Bolton has from the outset suggested a clear divergence between the Squirrel platform and the model employed by Harmoney.

Squirrel’s P2P service will offer both secured and unsecured personal loans of up to $70k. Borrowing rates will be determined via investor auctions. The platform will feature a provision fund – “Loan Shield” – which is the first mechanism of its kind to appear within the NZ market. Squirrel will charge flat fees – rather than percentage based fees – of NZ$250 for unsecured loans, or $500 for secured. The platform will also feature a secondary market.

Harmoney has barely been out of the spotlight since launching in the summer of 2014. Heartland Bank took a 10% shareholding in the company for an undisclosed sum of money in September 2014. The platform later raised NZ$10m in equity money in January, in a fundraise that saw it tie up with popular online trading marketplace Trade Me. Harmoney then revealed its institutional colours by raising $50m from the US-based Blue Elephant Capital Management. That $50m was part of a larger $100m debt capital fundraise, which also saw Heartland Bank participate.

Mr. Bolton, on the other hand, is looking to strike out on the P2P purist route:

“Squirrel Money will connect borrowers and lenders together. Unlike other P2P offerings in the market, we aren’t funded by a bank to deliver a bank-style offering. All our loans will be genuine ‘person to person’ loans.”

Bolton concluded:

“We want to stay true to the ethos of person-to-person lending and social entrepreneurship and, if international experience is anything to go by, this is an exciting time to be in the P2P space.”

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