Post by andrewholgate on Nov 29, 2013 15:51:41 GMT
On recent auctions there has been a number of questions raised as to how they have filled so quickly and why some lenders had large bids placed as the auction started. For some months, Assetz Capital has used a panel of lenders who have invested over an aggregate of £10,000 in the loans we have offered. This panel has been able to pre-bid on loans before launch which, when the concept was originated, loans would take some time to fill and having pre-bids would help get them off to a good start and promote confidence in the system. The success of Assetz Capital in recent months means that this panel has risen from a handful of lenders of a substantial number. The effect this has had is loans are filling before they launch and this leaves an unfair balance with our customers.
I still believe there is a reason to use this panel of lenders. Our recent loan for £1.75m was filling slowly until a number of larger bids came in ensuring the loan would go ahead. However, smaller loans will naturally fill and asking for pre-bids now seems unwarranted. To that end, we have decided to implement the following structure:
• Loans up to the value of £250k will be available for open auction with no pre-bids. For very small loans we may cap the holding of any one lender to ensure as many lenders as possible get a slice of the loan.
• For loans above £250k, Assetz Capital will use its discretion as to how much of the loan will be filled with pre-bids subject to at least £250k being available for open auction and no more than 75% of the loan being taken by pre-bids.
This should always allow a good size portion of the loan to be available to all lenders and as we grow we will keep this level under review.
We have also been asked if selling loan units at a premium on the aftermarket will be made available. Many of our lenders have deemed this to be unfair if we are using pre-bids as it gives an unfair advantage to larger investors to control the market by reducing yield to other lenders. To that end, whilst Assetz Capital adopts a policy of using pre-bids on some loans there will be no ability to sell at a premium on the aftermarket.
We continue to work with our lenders and listen to how we can make a fairer world for all. I hope you agree this is a fair resolution to the current concerns.
Andrew
I still believe there is a reason to use this panel of lenders. Our recent loan for £1.75m was filling slowly until a number of larger bids came in ensuring the loan would go ahead. However, smaller loans will naturally fill and asking for pre-bids now seems unwarranted. To that end, we have decided to implement the following structure:
• Loans up to the value of £250k will be available for open auction with no pre-bids. For very small loans we may cap the holding of any one lender to ensure as many lenders as possible get a slice of the loan.
• For loans above £250k, Assetz Capital will use its discretion as to how much of the loan will be filled with pre-bids subject to at least £250k being available for open auction and no more than 75% of the loan being taken by pre-bids.
This should always allow a good size portion of the loan to be available to all lenders and as we grow we will keep this level under review.
We have also been asked if selling loan units at a premium on the aftermarket will be made available. Many of our lenders have deemed this to be unfair if we are using pre-bids as it gives an unfair advantage to larger investors to control the market by reducing yield to other lenders. To that end, whilst Assetz Capital adopts a policy of using pre-bids on some loans there will be no ability to sell at a premium on the aftermarket.
We continue to work with our lenders and listen to how we can make a fairer world for all. I hope you agree this is a fair resolution to the current concerns.
Andrew
