Buying Shares in Saving Stream

Ooo I expect you would be disappointed with all the irrational exuberance around Altfi you would need to add at least another zero to your probable valuation

Don't you mean Universe?

I did read that interesting link, but that transaction merely valued a transfer of ZenCap's shares for FC's shares, might as well make the valuation look as high as possible.
I don't know what the valuation of the current larger UK platforms might be. I am looking forward to seeing one of the top 10 platforms raise money just to find out. But the problems at Lending Club are not unique. There have been problems at Prosper and OneDeck and others. In the UK VPC SL has just cut its dividend and most of the Investment trusts are trading at a decent discount. My guess is that the professional valuation is closer to 0.1 than 1.0. Of course on Seedrs they might get away with 2.0!
I agree with that, it is going to take very impressive management to make a success of P2P in the UK. There is a lot of competition and my guess is that the cost of getting borrowers is high, and good ones repay early and bad ones default!

I presume many people are aware that AC have raised about £3.3M via Seedrs.  Since the deal was for discounted convertible shares, the company value won't be known until someone else comes along and injects an additional £1M.  IIRC, if that doesn't happen by May '17, the conversion for Seedrs investors will occur based on a £25M value, with a 20% discount.  Does this suggest AC think their company is worth more than that?

Some random comments. The 1 times multiple was a highly simplistic multiple used for (as bigfoot12 rightly points out) a dominant (at the time) US market leader. The notion that you can extract £1 of value for every £ originated never remotely convinced me. A more realistic approach might be 7% (my rule of thumb for profitable companies) of just the live loan book (with perhaps some upwards tweaking if you can be confident this will be grown in future - & the platform generates ongoing revenue from older loans on their loan book. No idea on SS but some operators seem to charge an initial arrangement fee with no significant ongoing monitoring income).

In the case of SS you might want to apply a discount for their (AIUI) potentially significant skin in the who knows if it will turn out to be a winning old t&c loan book game. Not to mention something for the shorter dated loan book (6M vs 3-5Y is quite different.)

Any non-Top 3 UK platform would find it hard to argue they have an established position in the p2p market, & really none should until they have FCA authorisation in the bag (& know which others do too).

That said, I’ve always thought LendInvest would make a very interesting UK valuation example (particularly for property operators).

What’s the right price for SS? I have no idea, my instinct would be that a multiple much closer to 0.1 on live loan book would be about right (assuming they can demonstrate profitability & no legacy issues on the old loan book). £50m imho is fantasy-land (if perhaps not hugely beyond the realms of possibility of what some may dare to ask for)



My view is that SS are unlikely to wan't to capitalise on their shares until the platform has been running a strength for at least five years, and only then if they want a large chunk of cash. It is unlikely that they will need to capitalise to enable platform expansion.

That’s not my reading. 5Y is an eternity in P2P. Whilst the question of how realistic it is for a platform to carve out a niche / modest sized share of the P2P market is an interesting one (which I hope/believe is possible – does absolutely everyone really have to aim to be gigantic?) markets can be savagely competitive.

I suspect SS has already fallen behind the curve & with its high cost of capital has managed to continue growing - seemingly unscathed – only by loading greater risk onto its loans (& not having all its legacy issues come to light yet). With FCA & huge sector growth looming they will have to take on a sturdier structure, overheads will increase whilst p2p borrowing rates continue to fall, cash-burn could quickly become an issue (particularly if significant PF top-ups become necessary) no choice then but to take on a much cheaper cost of funding.

In a normal world that might mean they could be more amenable to a more modest (sensible) valuation, aimed at their historically enthusiastic lending base as much as anyone else.

If that was combined with a larger slice of equity (possible if they do not have insto backing ambitions) things might start to look more appealing.

Just to clarify - do you mean 10% of SS's £105m live loan book, 0.1 x 7% (so 0.7%), or 0.1%?



Very true!

Who, from the current UK market, existed five years ago? Z, obviously. RS, FC...? Any others?