OZ P2P Lender Pens AU$5m Deal

Macquarie Bank buys AU$5 million portfolio of loans originated by DirectMoney.

Australia’s only listed marketplace lender DirectMoney announced today an agreement with Macquarie Bank Ltd, a global provider of financial, advisory, investment and funds management services. As a part of the deal, Macquire has purchased $A5 million of personal loans originated by DirectMoney. The placement is the first institutional placement of DirectMoney’s personal loans and establishes the infrastructure for further access to debt capital markets investors.

Founded in 2006, but launched in late 2014, DirectMoney refers to itself as a marketplace lender and not as a P2P lender. The minimum investment term for an investment in the platform is 3 years and investments start from a minimum of AU$ 20,000. Borrowers might apply for loans of between $5000 to $35000 and repay them in periods of time ranging from 3 to 5 years. Interest rates are fixed from 8.5% per year and an establishment fee of $575 is charged as well. DirectMoney listed on the ASX last July, raising $11.2m via an IPO and becoming the first P2P business model to float in Australia and the fifth globally.

DirectMoney Chairman Stephen Porges commented the deal:

"As our loan volumes continue to build, we are very pleased to have reached an agreement with Macquarie. This deal allows both teams to work together in a collaborative manner to take DirectMoney's marketplace lending model to the next level. DirectMoney continues to invest in building a robust, scalable operating platform and strong, broker-partner loan origination channels.”

Macquarie is committed to providing DirectMoney with further access to the debt capital markets. Initial fees will be paid to the bank by way of shares in DirectMoney. In addition, the bank will receive an interest-based return on the portfolio and it has also rights to acquire further shares  - subject to a cap of 10 per cent – based on on-going performance based triggers.

Stephen added:

“Macquarie’s loan purchase and their capital markets expertise will assist in diversifying and strengthening our loan funding channels. With the securitisation market in the US now having issued more than $US8 billion of loans since 2013 we are delighted to work with Macquarie towards offering this product to Australian investors".

In a note from the platform, DirectMoney announced that it continues to take full advantage of the growing opportunities in the fintech sector, by adopting a diversified approach to fundraising in both the retail markets and the institutional debt capital markets.

In terms of similar deals with major local banks, it’s definitely worth mentioning the recent agreement between Melbourne-based peer-to-peer platform MoneyPlace and Auswide Bank at the end of last year. As part of the deal, Auswide Bank committed to lend $60m over five years and takes 20 per cent stake in P2P platform.

Similarly, Westpac - another Australian bank - is reportedly piloting a partnership with Prospa, an Australian online business lender and also G&C Mutual Bank is making personal loans via SocietyOne, the first P2P lender to start up in Australia.

Steven is a confirmed speaker at the AltFi Australasia Summit 2016 and he will be talking about how to build a solid consumer lending brand. If you want to know more about this topic, be sure to book your tickets for the Summit before they sell out.