Research provides the world’s first clear view of risks and returns of MarketPlace-Lending
Whoever wants to start seriously investing in MarketPlace Lending on a professional level, has to go to the US and the UK. China finds itself on third place internationally. Continental Europe is lagging behind because of disparity in rules and regulations and the lack of sufficient loans interesting enough for large(r) professional investors.
These are the main conclusions of HJCO Capital Partners, Rotterdam, who publishes an extensive research report, which – as far as known – is the first report that provides a comprehensive view on MarketPlace Lending (MPL). After detailed research the report shows which platforms may be the winners in this market and defines the risks and returns associated with MPL-loans.
Arthur Hopstaken, director and partner of HJCO: “MPL is a fast emerging financial industry. It has an important potential market and is expected to grow as a strong competitor to traditional financial institutions, primarily on the three most important markets: the UK, the US and China. That is why the report focusses on lenders via platforms in these countries. In the UK and the US professional investors have already invested billions of euro’s worth in MPL, which emphasizes the seriousness of this type of financing.”
Co-director and Partner of HJCO Willem Johannesma adds: “Despite the tremendous growth of new initiatives in financing platforms worldwide, we see that investors have much less attractive opportunities compared to borrowers, due to the small size of most platforms, the fact that platforms only exist for a short period and/or the high risk profile of the borrower.”
Most investable financing platforms have common characteristics: they are highly transparent, well organized and managed and have a strong financial base. Borrowers are well profiled and risk models are strongly developed and constantly improved as a result of more available data.
The legislation also forms an important factor for investors. Europe (excluding UK) does not yet agree on a uniform approach and China is still not transparent enough for investors.
Hopstaken explains: “Based on our research, we conclude that at present only a handful of platforms offer serious investment options. We see LendingClub and Prosper as the most attractive platforms because of their risk models, average returns on investment and transparency. Other platform surely will follow. MarketPlace lending will undeniable form a greater part of the global financial system that has placed approximating 200 billion USD in loans in the last couple of years.”
Read more in our report, titled: ‘WHEN FINANCE MEETS INTERNET, The MarketPlace Lending Industry’.
The report shows:
- The importance of MPL for the economy
- An overview showing which forms of MPL are most attractive, seen from risk and return
- An overview of trends within MPL
- Reasons for the rapid growth of MPL:
- capital requirements
- advantage of supervision (or lack thereof)
- low threshold of investing
Furthermore a summary and explanation on:
- Benefits for investors
- Benefits for the economy
- Risks for investors
- Risks for the MPL-industry