UK lending platform Funding Circle has struck a landmark deal with US investment group KLS Diversified Asset Management to lend £132m (US$207m) to small British businesses, reports the Financial Times.
The daily adds that it marks one of the first instances of cross-border participation in the alternative finance industry.
The deal between Funding Circle and KLS, a specialist fixed-income manager based in New York, is the first time a US investment group has lent to businesses through a European platform and is an example of big investors seeking to tap into the fast-growing peer-to-peer (P2P) sector.
Plans to securitise the loans by packaging them into bonds are also in the pipeline, as a way for a wider range of investors to gain access into the P2P industry and potentially higher-yielding assets, according to the FT.
KLS aims to start talks with credit rating agencies to give the resulting bonds, which would be denominated in sterling, an official stamp of approval.
Funding Circle said the deal “opens up investing” to a range of larger institutional investors, from credit funds to pension schemes and insurers.
Samir Desai, chief executive (CEO) of Funding Circle, said: “In the UK, Funding Circle now has more than 35,000 individuals, the government-backed British Business Bank and other institutional lenders all helping businesses access the finance they need to grow.”
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.
The EU and US’ shift in accounting standards may bring balance sheet losses and increase credit risk, according to James Elder, director of risk services at Standard & Poor’s (S&P) Global.