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Post by shanghaiscouse on Oct 7, 2019 13:36:04 GMT
It may be that retail investors buy them, but around 60% of all new loans originated go to 'institutional' buyers. In the summer they sold £232million of loans to Waterfall Asset Management as part of w wider plan to buy £1billion from funding circle - so you can guess who FC thinks is more important to them, and any individual retail investor comes pretty near the bottom of their list. Now you can also start to understand why FC have changed strategy and basically cancelled P2P, because it is much less hassle and lower cost to deal with a Waterfall. Who are Waterfall you ask, well they are bottom feeders who cleaned up after the US financial crisis by buying portfolios of distressed loans and recovering some, repackaging and selling on others. Basically the situation was FC had been relying on retail investors to sell loans to, but it was too slow and you all asked too many questions, so when these funds came along FC figured out it was much easier to focus on 'origination' then just sell the whole lot in one go, and not have to worry about managing retail investors or recovery.
In April they sold £187m to Pollen Street Capital, who they? Basically they RBS structured finance team who left as part of RBS restructuring. Yes, basically debt collecting and managing non-performing loans is their area of expertise.
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tjtl
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Post by tjtl on Oct 7, 2019 13:47:45 GMT
There was a profile on the CEO of Pollen Street in the Sunday Times - as said they are experts at managing and extracting value from debt portfolios. You cannot blame Pollen Street or Waterfall for seeing an opportunity, there are some very keen sellers of loans, and if they are canny they will be able to pick up blocks of debt at attractive prices. Frankly, I would be delighted if Pollen Street utilised more of the £2.6 bn they have under management to buy more of the FC loan book- they can certainly have mine!
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sl75
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Post by sl75 on Oct 7, 2019 14:01:00 GMT
For an institutional whole-loan buyer, your £20 or £100 loan part is barely going to be worth the time it takes them to keep track of it.
Furthermore, I don't see what's in it for FC to create a special system to allow institutional buyers to pick up (and maybe collate?) thousands of retail investors' loan parts, given that this merely diverts money away from their new loans pipeline.
I'd see it as rather unlikely that retail sellers are selling to anyone other than other retail buyers, who if this forum sentiment is anything to go by seem distinctly on the decline.
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benaj
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Post by benaj on Oct 7, 2019 14:18:47 GMT
Only FC (UK) has secondary market. Other FC operations do not have secondary market at all. I am happy for any investors to buy our "unloved" loans.
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tjtl
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Post by tjtl on Oct 7, 2019 14:28:09 GMT
Look what Pollen Street did with Arrow Global- they are very used to buying portfolios of debt, analysing the characteristics of the block, and making money. They don't buy individual lots of £500, but aggregated blocks.
Anyway, delighted that somebody may be buying- please don't stop!
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Post by shanghaiscouse on Oct 7, 2019 14:40:14 GMT
For an institutional whole-loan buyer, your £20 or £100 loan part is barely going to be worth the time it takes them to keep track of it.
Furthermore, I don't see what's in it for FC to create a special system to allow institutional buyers to pick up (and maybe collate?) thousands of retail investors' loan parts, given that this merely diverts money away from their new loans pipeline.
I'd see it as rather unlikely that retail sellers are selling to anyone other than other retail buyers, who if this forum sentiment is anything to go by seem distinctly on the decline.
Yes, I broadly agree, in fact I think what is going on is that FC is glad to see the back of retail investors and is basically 'running us down'. We think there is a liquidity problem at FC because repayments are taking longer and longer, but to FC that is simply evidence that their strategy is working and one day we'll all be gone.
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tjtl
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Post by tjtl on Oct 7, 2019 14:47:42 GMT
I agree that FC are turning their back on private investors, the economics of just having Institutional Investors (as well as the lack of grief from the private investors) probably looks compelling- and no need to give Institutions bribes of iPads to get them to invest.
P2P gradually seems to be dying as an economically viable model.
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blender
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Post by blender on Oct 7, 2019 15:30:31 GMT
Institutional lenders and FCIT used to buy whole loans, not partial loans, and in the days when you could see the loan book you could see which was which by the number of loan parts in the loan, many or one. So when you sell a loan part it will go to a retail lender, or at least someone who has signed up to use the platform as a retail lender. The lucky recipient is probably someone just like you.
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Post by shanghaiscouse on Oct 8, 2019 9:41:43 GMT
I agree, so what seems to be happening is all the new loans (presumably with better DD, but who knows) go to institutional investors, and all the bad cohort of loans made pre- and post-IPO recirculate around retail investors, hence the liquidity crunch on the retail side. I am pretty sure there is no such crunch on the institution side if they are getting away deals in the £200m plus range, but the terms will be bad as those 'special situations' funds know that they can only really control one thing, the price they buy assets at....
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dorset
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Post by dorset on Oct 8, 2019 11:11:46 GMT
Institutions get a portfolio block of whole loans. This is an opportunity for FC to self-select which loans go out as whole. That is better quality (in terms of amount of DD) so as not to upset the institutions.
The rest are placed with retail investors (minimal DD, doggy quality) but hey it keeps growth figures up which should please the markets and keep that pesky share price north of 90p.
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