£3.4m WInd Turbine Portfolio Loan

Defo FredDrift!

There have been some good points made in this thread, perhaps andrewholgate might like to take a look.

I agree that this aspect is not an improvement.  

I do think the retail pool of investors may still grow dramatically.  We may get a large influx of NISA funds into investments such as the GEIA, and some of these lenders may wander over into the MLIA once they see higher headline rates.  The website will probably develop to become easier to use, with more automation.  Some lenders may feel that as AC have priced the risk of each loan they don't need to bother with due diligence and will simply pick loans at random or according to LTV / quality of security / rate.  If the GEIA provision fund is a success it might be extended as an opt-in option on the MLIA, which might encourage a flood of new lenders.  

I suppose a lot will come down to NISA marketing, and how ready each platform is in terms of bug-free site and loan supply.  RS is in pole position, IMO, because their model copes well with balancing loan supply and demand, while AC have a longish lead time bringing in new loans (a flood of new lenders might clean out the aftermarket, leaving slim pickings).  But AC still have time to clean up their site, and it's only a month since they moved onto the new site.  

If and it is a big IF ATM, the GEIA takes off then presumably the investments will mainly come from the existing WT AM. This will reduce UW's commitments whilst at the same time enhancing AC's margins albeit there will be the added security of a PF. However if the LTV's are accurate (or as near as can be) in the first place then a PF is not required. What it does do though is give investors a further degree of comfort.

Looking further afield, I can envisage a day where MLIA will become redundant and another avenue will be established where all loans will never hit the market. Similar to the GEIA, let's call it a MK2 with a provision fund and a projected return. UW's will start the ball rolling with the initial funding and the loans will be 'sold' off via investors engaging in the MK2. 

All crystal ball glazing on my part.

There's a very simple solution that seems to be being overlooked.  It's the one shadow bidders used when their shadow bids were called.  They simply put funds into their Cash accounts.  Having done that, the money was sitting available to be used to settle their shadow bids and there was no risk of it being used for any other purpose.

All AC have to do is make a small tweak to their system so that targets set for Upcoming loans -- shall we call them pre-bids? -- are treated similarly to shadow bids and money is taken to fund those bids at the time the loan draws down.

Am I missing something that would make this solution impractical/unworkable?

IIRC, from a earlier post from AC, it was their goal to eliminate the problems with drawdown delays and all loans would eventually be fully funded without any prior participation from retail lenders. The retail lenders would then pick up what was on offer on the AM.

Have I got that right?

That's why one day I expect individual loans may disappear off the screen and we will simply be presented with a version of GEIA for bridging loans, working capital loans, etc, etc - all rolled into one. Those cherry-pick loans I doubt we would ever hear about. It would certainly be easier for AC - avoiding all those questions which must be time consuming along with any criticism. Whether they could get enough retail lenders interested is of course debatable but by then they may just operate with HNW individuals and institutions. That seems to be the next step for the odd P2P company that has established itself and any retail lenders are fobbed off accordingly.

It's a bit odd in the new model if U\W aren't compelled to liquidate even partially within a fixed timescale. Ideally, they'd be required to place the whole lot by a deadline, with the option to "buy back" their existing investment for long-term holding via the open market (in fair competition with all other lenders). That would ensure that their first-mover advantage was somewhat muted, would provide them with the option to retain long-term if they wanted (as normal investors), and would mean AC was only paying any u\w overhead for the period when they were behaving as an underwriter. I'd hope the new multi-account system could handle this trivially.

Otherwise, as others have said, this isn't even underwriting-ish: it's just being an initial lender in a pool with more restricted entry.