Large Investment Opportunity

Surely the figures are very similar. It's only the valuation that has increased from circa.£25M to £30M. That is probably the result of a formal valuation.

The MT option 1 loan amount is identical at £8.5M.

The MT option 2 was £3M for 6 months including interest. That looks like the £2.5M (without interest) that has now been sourced, which leaves £6M to be funded.

Every time I see these sort of offers, I feel there's a gap in the market for someone to set up a platform for aggregating bids from us minnows. A p2p2p platform where you own loan parts in a loan part.

The very reasons I, and obviously many others, like SS. All this complex taxation talk makes my head spin, along with the secondary market with it's premiums, discounts and possible taxation implications is simply too much for many simple investors like myself. You clever bods are welcome to it, really. And speaking of which, one look at the secondary market has me wondering why anybody would buy? 9 percent is the best I see. Am I missing something?

FS have been at this game rather longer that MT and I reckon they've got a fairly good handle on what it takes to motivate lenders of different sized pockets to start moving more significant (in their terms) chunks of money about.

A "typical" FS bridging loan might be around the £500k mark and generally fills OK through a combination of smaller lenders at 12% plus some mid-range lenders getting 13/14/15% for £10k-50k sums. Another 1% across the board might be enough to get everyone to double their stakes but that still leaves FS some £5m short of a £6m target.

To fill that sort of loan they need a fair number of the £250k+ brigade to take a serious look at FS and decide to move in some big money. My guess is the borrower will be paying around 1.5-1.7%pm / 18-20%pa so 17% leaves FS with a pretty thin margin on the very largest investments. But to give that sort of return to the largest players they need to keep as much in the bag as possible at the other end. Perhaps we'll see another bonus level inserted at 13% for £20k+ (say), but the risk then is that those who might have stretched to £50k for 14% decide the better risk/reward balance is to stick with £20k at 13%.

It does actually exist on TC. They are called TLC loans and they benefit from the bonuses offered on larger bids. It isn't all that popular though, and it's being phased out. I don't think it would work well on FS because bonuses are paid upon repayment and I think you lose them when loanparts are sold on the SM.

I think this loan is so enormous for the number of lenders that they need big underwriters. That means offering say:
£4m @ 17% (10x£250k lenders)+(3x£500k lenders)
£1m @ 15% (10x£100k lenders)
£0.5m @ 14% (10x£50k lenders)
£0.5m @ 12%.

That is equivalent to 16% on average.

If instead of staged bonuses FS offered everyone 12%+4%bonus that would be the same cost, but would we fill it?

Perhaps we need a poll  -  "How much would you invest at 12% + 4% bonus?".

Which platforms would allow investment clubs to sign up as lenders?

The alternative is to set up a limited company. What would be the overheads? How much capital (250,000 £1 shares?) is needed to make it worthwhile.

UPDATE:

We have had a very positive response confirming that, subject to the necessary caveats, we would certainly be able to fund a loan of £6m.

We had hoped, by now, to be able to provide additional information and to post the loan on the platform, unfortunately this has not yet been possible.

We have started the due diligence and have already had a meeting with the borrower to review the overall loan requirements. We are still discussing the details and working on verifying a number of aspects of both the security and the exit strategy.

There remains a lot of work to be done before a final decision is taken but as soon as we are able we will come back with additional information. We hope to be in a position to provide an update early next week.

FundingSecure