P2P lender to broaden scope

07-Dec-2015

By Elizabeth Somerville

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Peer-to-peer lending platform InvoiceX is set to extend its offering in the new year following success in the high net worth (HNW) space.

Currently, the group provided a channel for sophisticated and HNW clients to invest in successful Australian companies that provided a business-to-business service, a strong credit history and a large client base, InvoiceX director Steve Yannarakis told financialobserver.

“There are three family offices that have come on board [to use InvoiceX] and they’re ultra-high net worth [entities],” Yannarakis said.

“They’ve got a lot of firepower, and they’ve trialled us for about a year and they’re extremely happy.”

A large financial services institution would join in 2016 and planned to invest money on InvoiceX’s platform as part of a large fund, he said.

“Effectively we look at ourselves as being problem-solvers and there are two problems out there at the moment,” he said.

“There are a lot of investors who are hungry for reliable, dependable yield, and it’s harder and harder to get that.

“On the other hand, there are lots of businesses out there that are being disadvantaged by the traditional bank structure [which requires real estate collateral to advance funds].”

InvoiceX filled that gap by providing an advance of 80 per cent of the invoiced amount a business was required to pay, he said.

“What we do is use the invoices effectively as the security,” he said.

“Businesses like this as, first, they do get the cash traditionally, which is incredibly helpful, and secondly, our product is confidential, so their end customer [who is receiving the money for the invoice] doesn’t know about it.”

InvoiceX director Dermot Crean said invoices were paid by extracting funds from the individual bank accounts of clients and pooling them to provide capital loans.

“Everyone has their own separate bank account, [and funds from these] are then drawn into the deal, so it’s like there’s a syndicate in each trade,” Crean said.

“Your participation in a trade is part of your own portfolio, so you own 10 per cent of trade XYZ, and when that money comes back, it’s back in your bank account again with interest.

“It’s not in units, it’s in cash in your bank account, with your name on it.”

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