MARKET INSIGHT
Why London’s calling for alternative investors
A Q&A with Andrew Thomson, chief executive of London Capital & Finance Plc
Who are London Capital & Finance Plc? London Capital & Finance Plc (LCF) was established in 2012 to provide structured and secured bespoke lending solutions to British businesses, many of which have been let down by traditional sources of lending. LCF raises capital via various fixed interest offerings that in turn fund its lending activities. The business strategy was shaped with the
needs of both the borrowers and investors in mind. This approach has proven to be very successful for us delivering positive returns— in our last financial year we increased revenue by 725% and increased the size of our loan book by 525%, similar results are expected for the 17/18 year-end. To date we have in excess of 10,500 individual investors on our books and have issued bonds in excess of £140 million ($186 million).
What is your view on the opportunities in the UK commercial lending market? At the end of 2017 there were 5.7 million businesses in the UK. According to latest statistics published by the British Bankers Association, cumulative lending to UK businesses between July 2011 and June 2016 had dropped by £9.7 billion.
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UK BUSINESSES ARE NOT BEING CATERED FOR BY TRADITIONAL SOURCES OF FUNDING AND MORE ARE TURNING TO ALTERNATIVES FOR THEIR FINANCING NEEDS
A recent article in the Financial Times
highlighted that traditional banks are still reluctant to lend and challenger banks are reverting to classic business models. Arguably this has been brought about by increased regulation, capital adequacy requirements, stress testing and liquidity risk. What this means to the banking world in short is that loans are more expensive to make and the more complex a loan is the greater the cost to the bank. It is clear to us that UK businesses are not
being catered for by traditional sources of funding and more are turning to alternatives for their financing needs. The centre for economics and business research has predicted that the alternative lending market will grow to £10 billion by the end of the decade up from the c.£4.5 billion it stands at today. We looked at the overall lending market
place and concluded there are a number of alternative lenders catering for the smaller straight forward lending market. The opportunity as we see it lies with those companies that have more complex and
ISSUE 73 | 2018
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