puddleduck
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Post by puddleduck on Oct 30, 2019 11:32:18 GMT
From Growth Street's recent e-mail: 'here are two large facilities which fell outside of the new policy and which went into default. The provision would not have been sufficient to cover the full exposure to these facilities. To protect investors from being exposed to losses from these two facilities, and to allow us the time and flexibility to maximise recovery, we have decided to purchase both facilities out of the portfolio at full value and take them on to the balance sheet of Growth Street Holdings Limited
This seems similar to an action Ratesetter took a while back to preserve the provision fund and protect investors from losses.
Reading between the lines, both defaults were £1M+ plus!
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benaj
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Post by benaj on Oct 30, 2019 11:35:51 GMT
From Growth Street's recent e-mail: ' here are two large facilities which fell outside of the new policy and which went into default. The provision would not have been sufficient to cover the full exposure to these facilities. To protect investors from being exposed to losses from these two facilities, and to allow us the time and flexibility to maximise recovery, we have decided to purchase both facilities out of the portfolio at full value and take them on to the balance sheet of Growth Street Holdings LimitedThis seems similar to an action Ratesetter took a while back to preserve the provision fund and protect investors from losses. Reading between the lines, both defaults were £1M+ plus! When did Growth Street send this email? I haven't seen it yet.
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puddleduck
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Post by puddleduck on Oct 30, 2019 11:37:45 GMT
From Growth Street's recent e-mail: ' here are two large facilities which fell outside of the new policy and which went into default. The provision would not have been sufficient to cover the full exposure to these facilities. To protect investors from being exposed to losses from these two facilities, and to allow us the time and flexibility to maximise recovery, we have decided to purchase both facilities out of the portfolio at full value and take them on to the balance sheet of Growth Street Holdings LimitedThis seems similar to an action Ratesetter took a while back to preserve the provision fund and protect investors from losses. Reading between the lines, both defaults were £1M+ plus! When did Growth Street send this email? I haven't seen it yet. It came through just after 11AM, titled 'New FCA regulations'
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benaj
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Post by benaj on Oct 30, 2019 11:45:46 GMT
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sd2
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Post by sd2 on Oct 30, 2019 12:31:41 GMT
Very nice of them. Always thought they were a risky investment as in essence they are lending to people with a cashflow problem. The latter statement is maybe a little over the top but not entirely inaccurate. I sold out as soon as I got my £200 but have kept my account open. There is some advantages with them ie only 30 day loans. I suspect they will get a fair bit, if not all there money back. But the provision fund couldn't take that big a hit without a Resolution event taking place. Which would of course have led to lenders fleeing Growth street. That assume they won't? As with ratesetter they were less than professional in not realizing that this could happen.....chasing growth and ignoring risk? Combined with the events at Funding circle are we seeing the start of a recession?
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Post by gravitykillz on Oct 30, 2019 13:24:07 GMT
Cracks are appearing in their business model. If this is not a warning sign I dont know what is.
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benaj
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Post by benaj on Oct 30, 2019 13:43:38 GMT
Let's wait and see when the defaults mentioned in the email are included on their stats later.
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zlb
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Post by zlb on Oct 30, 2019 15:51:20 GMT
so their statement in the email isn't believed? "As GSH is well capitalised and has significant cash available, this has not materially impacted Growth Street’s working capital position, financial resources or stability."
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jlend
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Post by jlend on Oct 30, 2019 16:10:06 GMT
so their statement in the email isn't believed? "As GSH is well capitalised and has significant cash available, this has not materially impacted Growth Street’s working capital position, financial resources or stability." It is a very small part of the equity they have raised since inception which totals 22.5m so it won't make a material difference as they say. They have backers with very deep pockets unlike some platforms where we have seen issues. It is worth remembering that is it not unusual for startups in any industry including financial services to have things like this occur in their early years as the look to scale up. The new FCA reporting requirements on 9th Dec are also having an impact in a positive way IMHO.
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zlb
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Post by zlb on Oct 30, 2019 16:51:04 GMT
so their statement in the email isn't believed? "As GSH is well capitalised and has significant cash available, this has not materially impacted Growth Street’s working capital position, financial resources or stability." It is a very small part of the equity they have raised since inception which totals 22.5m so it won't make a material difference as they say. They have backers with very deep pockets unlike some platforms where we have seen issues. It is worth remembering that is it not unusual for startups in any industry including financial services to have things like this occur in their early years as the look to scale up. The new FCA reporting requirements on 9th Dec are also having an impact in a positive way IMHO. a positive effect by requiring platforms to clear out loans which don't meet correct criteria? So a bit like AC announcing the pay-off of lenders on wind turbines (my vague understanding as I wasn't in those loans), except AC used a PF and not their own finance. In either case GS and AC have posed their addressing dodgy loans as somehow beneficent on their part, whereas it's really the FCA who are kicking them into action...?
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Post by dan1 on Oct 30, 2019 18:26:37 GMT
so their statement in the email isn't believed? "As GSH is well capitalised and has significant cash available, this has not materially impacted Growth Street’s working capital position, financial resources or stability." It is a very small part of the equity they have raised since inception which totals 22.5m so it won't make a material difference as they say. They have backers with very deep pockets unlike some platforms where we have seen issues. It is worth remembering that is it not unusual for startups in any industry including financial services to have things like this occur in their early years as the look to scale up. The new FCA reporting requirements on 9th Dec are also having an impact in a positive way IMHO. The same was said of FS only a matter of days before they entered administration (my bold above, and below)... In my opinion FS are basically bust. They don't have enough money to chase the borrowers who have taken them for a ride and they have nobody to blame but themselves. It seems improbable that FS have the money to chase the numerous loans which are quite complex so they choose not to (power boat, Harrogate, Whittington. Lytham St Ann's etc) and prefer to take the ostrich approach. This is just wishful thinking and not based on reality at all. FS have very wealthy backers who have invested large sums into the business. They are a profitable business according to accounts filed at CH. Every one is welcome to their opinion but at least ground it in some facts rather than what you would like to happen. FS have historical problem loans that do need to be dealt with and have made some poor decisions in the past but constantly predicting their demise helps no one. I didn't believe the capitalisation of the backers was the main risk... But that doesn't in itself tell us anything about the actual probability of FS failing in the near term, it is merely an accurate description of the state of the platform. A lot will have to change for FS to survive as a brand long term, but I would be very surprised indeed if they failed in the next few months. It would simply defy logic given the support provided by the new directors this year. As I cautioned yesterday, be wary of journalists who will not have the insight to form an accurate view of the probability of any given platform failing.
As I see it, the main risk with FS isn't being forced into administration as per Lendy & Collateral because the new owner has deep pockets. However, I do forsee a time when the new owner may decide to call it a day and either attempt to sell the business, or elements of, or put it into voluntary liquidation to wind it up in an orderly fashion. Arguably neither outcome is desirable from a lender perspective. I've no reason to believe FS are anywhere near to these but external factors such as the wider economy (without mentioning the elephant in the room!) and/or further FCA intervention could act as a catalyst. It's ever present when I decide to invest or not these days. I have no information regarding the position of GS but I would caution against placing too much emphasis on their backers. I guess it's obvious but they're not in this game to continue a loss making enterprise ad infinitum. From a personal perspective there's a lot to like about GS, their comms is excellent, and short term loans suit, perhaps, the fast moving nature of this business.
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zlb
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Post by zlb on Oct 31, 2019 10:15:50 GMT
I have no information regarding the position of GS but I would caution against placing too much emphasis on their backers. I guess it's obvious but they're not in this game to continue a loss making enterprise ad infinitum. From a personal perspective there's a lot to like about GS, their comms is excellent, and short term loans suit, perhaps, the fast moving nature of this business. thanks dan1 - I'm confused when on the one hand people say that a platform needs good capital in the first place, yet when there is platform collapse, it appears from debate that capital could be money claimed against by anyone apart from lenders (according to the loan agreement). The same sounding issue has come up in this thread about Octopus group having such great finance in its other 'arms' that this means they are less risk on their P2P arm. But I would have thought that whether or not finances from other arms of O are used in their p2p offer collapsing, can't be taken for granted. Unless, that is, the overall imperative would be for Octopus to step in and plug any OC problem? p2pindependentforum.com/thread/15870/where-invest-main-platform-2019?page=2
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Post by dan1 on Nov 1, 2019 9:45:26 GMT
I have no information regarding the position of GS but I would caution against placing too much emphasis on their backers. I guess it's obvious but they're not in this game to continue a loss making enterprise ad infinitum. From a personal perspective there's a lot to like about GS, their comms is excellent, and short term loans suit, perhaps, the fast moving nature of this business. thanks dan1 - I'm confused when on the one hand people say that a platform needs good capital in the first place, yet when there is platform collapse, it appears from debate that capital could be money claimed against by anyone apart from lenders (according to the loan agreement). The same sounding issue has come up in this thread about Octopus group having such great finance in its other 'arms' that this means they are less risk on their P2P arm. But I would have thought that whether or not finances from other arms of O are used in their p2p offer collapsing, can't be taken for granted. Unless, that is, the overall imperative would be for Octopus to step in and plug any OC problem? p2pindependentforum.com/thread/15870/where-invest-main-platform-2019?page=2It's the underlying position of the P2P business that should be of greater concern. Wealthy backers can provide access to short term funds required to stabilise a business that hits a bump in the road but they're not going to pile money in unless they see a decent chance of a future return. On the other hand, if a P2P business doesn't have wealthy backers but is achieving milestones on their road to profitability then then wealthy backers will invest in the business. I guess it's all too easy to lose sight of the fact that, in the majority of cases, we're investing in young FinTech startups being funded by angel investors. Let's face it, the expectation is that most will fail but you hope the unicorns will compensate and overall you'll achieve a decent risk adjusted return. It's probably why I perceive lending blindly in P2P is a mugs game, you have to be active to protect you capital. All IMO of course.
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Post by p2plender on Nov 4, 2019 7:53:22 GMT
From Growth Street's recent e-mail: ' here are two large facilities which fell outside of the new policy and which went into default. The provision would not have been sufficient to cover the full exposure to these facilities. To protect investors from being exposed to losses from these two facilities, and to allow us the time and flexibility to maximise recovery, we have decided to purchase both facilities out of the portfolio at full value and take them on to the balance sheet of Growth Street Holdings LimitedThis seems similar to an action Ratesetter took a while back to preserve the provision fund and protect investors from losses. Reading between the lines, both defaults were £1M+ plus! Careless as well as reckless, fortunately with their 'own' money thus far. Not a platform I'll be hanging around much longer. One thing reducing rates, it's another losing large amounts like this. Risk/reward not worth it at 5.3% for such a small/new platform. Shame as it looked quite good (like many others) once upon a time.
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Post by gravitykillz on Nov 5, 2019 7:31:39 GMT
This is not a platform which can handle six figure losses. I do not have any funds in gs since August but I would suggest moving funds to ratesetter just to be on the safe sides. As any further losses (which could happen) could bankrupt the business.
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