GLI Finance Bets on Portfolio Strategy with Multiple P2P Platforms

I recently caught up with Louise Beaumont, founder of Platform Black and now head of public affairs for GLI Finance (“GLIF”). GLIF describes themselves as the leading alternative provider of finance to SMEs in the UK, U.S. and Europe transitioning to a strategy of investment through alternative finance platforms. Or put more directly, they want to be the Institutional equity partner and investors to multiple alternative P2P lending platforms. They are publicly traded on the AIM, a sub-market of the London Stock Exchange.

Louise’s role is to ensure GLI Finance is a strategic partner of choice globally for alternative finance and to leverage sales and marketing to ensure each platform grows. They want to become market leaders in their chosen areas and have platforms in America, Africa, and Europe are looking at Asia and the Middle East as well.

Their two part strategy appears to be first, make an equity investment in the platform and second, have first call on being an investor in the platform. It seems they want to spread their risk and options and obviously sincerely believe platform lending is the way forward.

For example, as of 30 June 2014, the company invest GBP 20.8M in 10 alternative finance platforms including:
• BMS Finance, a UK & Europe term offline lending
• FundingKnight, UK P2P lender
• Proplend, UK P2P commercial Property lend
• Sancus, an offshore secured lender
• Raiseworks, US term lender
• Platform Black, UK Receivables exchange
• TradeRiver Finance UK trade finance
• Dansk Faktura Børs, Danish receivables exchange

GLIF invested GBP 2.0m for a combination of ordinary and preference shares in the company Louise help found, Platform Black. The Board increased the valuation to GBP3.0m. Their biggest investment is in BMS Finance, a UK and Europe term lender. They just announced on 14 November 2014 a conditional sale and purchase agreement with Sancus Holdings Limited to acquire their existing loan book and an income stream for a total consideration of £37.75 million. In the world of alternative finance it pays to read the details. In this particular transaction, Mr Geoffrey Miller, the Company's Chief Executive Officer and a Director of the Company, was also a non-executive director of SHL.

As to Asset Deployment, as of July 2014 GLIF had £68 million deployed in the following manner (which is a slight decrease from a year ago due to their exit from the CLO asset class):
• SME Platforms £16.7 million
• Loans £24.8
• FOIF Shares£19.8
• Other & Cash £8 million

As the company disposed of CLO assets over the year, it is hard to do a year on year comparison. But so far they have made $163K on interest funding platforms (ex BMS), a small number I am sure they hope mushrooms.

They challenge they will have, like others, is customer acquisition costs. I spoke to Louise about this. While using bank referrals is a good start, eventually these platforms will need to lower acquisition costs or else face extinction.

If you want to find out more about the company, visit the stock quote here

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