|
Post by scepticalinvestor on Mar 31, 2020 17:42:39 GMT
|
|
|
Post by sjames on Mar 31, 2020 18:04:34 GMT
I'm no market expert but surely RS would have to be serious and immediate trouble to even consider selling up in the current business environment?!
|
|
|
Post by scepticalinvestor on Mar 31, 2020 18:45:06 GMT
Possibly. It's hard to say what the implications may be for us as investors. I'm no market expert but surely RS would have to be serious and immediate trouble to even consider selling up in the current business environment?!
|
|
r00lish67
Member of DD Central
Posts: 2,691
Likes: 4,048
|
Post by r00lish67 on Mar 31, 2020 18:51:38 GMT
I'm no market expert but surely RS would have to be serious and immediate trouble to even consider selling up in the current business environment?! Me either, but I guess given the complexity of the task it's best to try and start early in seeking possible resolutions. I can't imagine it would be remotely possible to actually act for the next few weeks. How would any incoming businesses perform valuations etc, both in terms of the practicality of site visits and the great difficulty in assigning values at this point.
|
|
|
Post by scepticalinvestor on Mar 31, 2020 18:59:47 GMT
There's plenty of vulture cash floating around hunting for distress buys in the current market. RS may be able to find a buyer, but the question is at what valuation? Perhaps more importantly, what would RS finding a buyer (or not) mean for us? I'm no market expert but surely RS would have to be serious and immediate trouble to even consider selling up in the current business environment?! Me either, but I guess given the complexity of the task it's best to try and start early in seeking possible resolutions. I can't imagine it would be remotely possible to actually act for the next few weeks. How would any incoming businesses perform valuations etc, both in terms of the practicality of site visits and the great difficulty in assigning values at this point.
|
|
|
Post by blueboy on Mar 31, 2020 19:25:16 GMT
So first a request to the government for help, now looking for a merger. Must be really struggling.
|
|
|
Post by shanghaiscouse on Mar 31, 2020 19:44:28 GMT
Well, this is bad news. If you look at their last accounts filed, which are now a year old, you can see that they are continuosly cash negative and have only been supported by regular capital injections, £28m in the last 2 financial years which is basically the same as the total cash outflow. Hence they have always been trying to issue as little new stock as possible to prepare for their IPO which has never happened, thanks to the disaster of the Funding Circle IPO. How Ratesetter must now rue the day that they didn't IPO first, now FC have poisoned the well forever.
So the problem for we investors is that unless they raise £15-20m in short order they will run out of money. At the end of March last year they had £19m cash but £15m of that had just been raised, and at their burn rate most of that is now gone.
If it can' raise funds then according to the terms it has the right to announce a "Stabilisation Period" and cut all returns to investors, and even a capital reduction where investors transfer a % of capital into the provision fund. This surely must be coming down the pike. If it gets worse and they wind down then all bets are off but in any case an extra 2% fee will be charged.
With FC setting the sector valuations, and the virus, I can't see anyone putting another £20m in, so batten down the hatches for the Stabilisation Order to be announced.
|
|
|
Post by RateSetter on Mar 31, 2020 20:31:22 GMT
Good evening everyone. We have published a response to the Sky News article on our blog here, which is copied in full below for reference.
|
|
|
Post by Deleted on Mar 31, 2020 20:56:22 GMT
Well if cash burn rate is an issue, I am sure they can save a few quid by not wasting money on redesigning the website to look like it was drawn by children with crayons.
|
|
dave4
Member of DD Central
Cynical is a hobby not a lifestyle
Posts: 990
Likes: 564
|
Post by dave4 on Mar 31, 2020 21:41:18 GMT
Well if cash burn rate is an issue, I am sure they can save a few quid by not wasting money on redesigning the website to look like it was drawn by children with crayons. Congratulations that's the first p2p comment to make me smile all month
|
|
|
Post by scepticalinvestor on Mar 31, 2020 21:57:09 GMT
Thanks for the response to the Sky News piece RateSetterHowever, I don't see anything in it that refutes the substance of the story. It's a sad day for me today as I've RYI'd my last remaining 5y investment. The return I'm getting no longer justifies the risk involved. My access funds are already in the queue so hopefully I should be fully divested in 2-4 weeks. It's by no means goodbye. If RS survives this crisis and things return to normality, I will definitely be back. I sincerely hope they do.
|
|
|
Post by shanghaiscouse on Mar 31, 2020 23:25:20 GMT
I find the response mendacious. How can they say their loan book quality not deteriorated on the same day that the BofE has asked all big banks to cancel payment of already-announced dividends so that they can survive? And you think the borrowers who took personal loans from ratesetter are somehow immune to this crisis? Its a ridiculous position to take.
|
|
|
Post by blueboy on Apr 1, 2020 8:26:00 GMT
I find the response mendacious. How can they say their loan book quality not deteriorated on the same day that the BofE has asked all big banks to cancel payment of already-announced dividends so that they can survive? And you think the borrowers who took personal loans from ratesetter are somehow immune to this crisis? Its a ridiculous position to take. It is a ridiculous position. I wouldn’t mind if they said they are going to put the whole thing of withdrawals and loan repayments in deep freeze and just let this whole thing recover when it does. They have a huge run going on and the risk of default increases daily fi4 obvious reasons.
|
|
rscal
Posts: 882
Likes: 484
|
Post by rscal on Apr 1, 2020 10:00:35 GMT
Where would any 'white knight' investors get their money? No seriously, there is 'no money' that doesn't come from fiat issued lending these days. But, I supposed (certain ppls) salaries are at stake here so....
|
|
|
Post by shanghaiscouse on Apr 1, 2020 10:50:03 GMT
There is a long line of people holding out a begging bowl in front of 11 Downing Street. Ratesetter is small potatoes, £800m in personal loans means nothing in the big picture. I doubt they will get much and certainly not enough to cover the £15m they need to keep the lights on. The problem for them, same with Funcing Circle, is that they take a % of loans. Thus far loans under management has only ever grown and so they added more and more costs in anticipation of endless growth. Now it has all gone into reverse and the loan book is shrinking, so their revenue is also shrinking. They needed £15m a year of fresh capital with a growing loan book, so as their revenue shrinks the amount of money they need grows, the availability and cost of such money becomes a big problem, and there is no end in sight. This last point might be the most important, with the government seemingly willing to run an open-ended crisis, then there is no way out for RS.
|
|