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NEWS

Capital Engine had a record 2017

19th January 2018

Capital Engine raised £12.8m for 4 companies in 2017, bringing the total raised for UK SME to £27m since Capital Engine’s first loan in June 2014. Most of the total funds were raised via the ThinCats SME lending platform which aggregates retail and institutional funds looking for attractive fixed income returns. 18 of the 34 loans arranged have now repaid. The 4 loans made in 2017 included an acquisition finance loan for a mortgage servicing company, a refinancing of debt for an insurance company, a refinance of an acquisition facility for a boat yard with moorings on the Thames and a residential development loan in St Helen’s.
 
Andrew Moffat of Chelsea Boat & Yacht Company commented:
“Capital Engine arranged our loan refinancing within a tight timetable and on sensible terms. As bank appetite for multi-year SME lending has systemically reduced, there is a real shortage of this type of long-term funding for entrepreneurial businesses. We would recommend Capital Engine as reliable and professional partners.”

ThinCats breaks record for largest non-property P2P loan with £3.5m auction for LAMP Group

27th April 2016
  • ESF Capital underwrote the deal, while Capital Engine acted as sponsor

 

Europe’s – and possibly the world’s – largest ever non-property peer-to-peer loan, listed on the ThinCats platform.

The £3.5 million loan to insurance group LAMP is a new landmark for the rapidly growing peer-to-peer lending sector, which competes with banks as a source of funds for businesses and consumers. The sector is growing in popularity, lending more than £2.2 billion in 2015, equalling in one year the total lent in the decade that preceded it.*

LAMP Group, which specialises in the healthcare and legal sectors, will use the money to consolidate existing debts and cover costs as it prepares for a round of equity fundraising. It is one of the largest established businesses to ever raise money through peer-to-peer, having grown its initial capital of £5million at incorporation in 2005 to net assets of £24.5 million (audited as at 31 March 2015).

The record-breaking loan was facilitated by Europe’s largest secured P2P business-lending platform ThinCats, founded in 2010 and recently acquired by P2P accelerator ESF Capital. Prospective investors are able to participate in the auction, with ESF underwriting the loan to ensure that bids meet the £3.5 million requisite.

Capital Engine structured the loan for ThinCats and has invested half of its arrangement fees into the loan on the same terms as other ThinCats lenders.

John Mould, CEO of ThinCats, commented: “LAMP is a well-established business with a significant market presence. This shows that P2P lending in general – and ThinCats in particular – is beginning to vie with traditional lenders as a mainstream provider of capital to increasingly large companies.

“We expect to see an upward trend in both the size and variety of deals as more businesses discover the benefits of financing through P2P lending.”

 

Christopher Rothschild of Capital Engine, commented: “This transaction shows that ThinCats is maturing into a marketplace where established businesses can raise structured term debt on attractive terms. We are keen to identify more good borrowers and make further inroads in the underserved SME loan market by structuring loans which enable borrowers to achieve their aims while also offering good yield investments to lenders.”

New Investment and Management at the ThinCats platform

17th December 2015

In December 2015 ESF Capital announced it had acquired 73.4% of Business Loan Networks Ltd, owner and operator of the ThinCats P2P platform. ESF also announced plans to grow the plan significantly through development of systems, personnel and underwriting capital. John Mould, the new CEO for ThinCats, was previously Chief Operating Officer at New Star and subsequently Hermes Asset Management giving him deep experience in managing and growing complex financial services businesses.   As ThinCats represents Capital Engine’s main source of finance for our SME Borrowers we are delighted to see the deeper pool of capital at ThinCats.

ESF intends

  • to improve ThinCats operationally for existing lenders thus encouraging them to deploy a higher proportion of their investable assets through ThinCats
  • to improve ThinCats’ credit standards so as to deepen lender confidence in the loan opportunities listed on ThinCats
  • to provide underwriting and lending capital itself and , in time, to raise further institutional capital to enable larger loans to be raised for larger Borrowers

This represents a major opportunity for ThinCats, Capital Engine and its Borrower clients

Sophie Muir spoke at Bank of England Open Forum

12th November 2015

In November 2015 Sophie Muir was invited to speak at a breakout session of The Bank of England’s forum on ‘the Role of Markets in Society’. Her invitation came from the Treasurer of Vodafone plc, an ex-client of Sophie’s from her Citigroup days who had followed with interest her journey into the field of P2P lending. Key Note speeches at the forum were given by Chancellor of the Exchequer George Osborne, Bank of England Governor Mark Carney, and President of the European Central Bank Mario Draghi. These signified the importance within governmental and regulatory circles of new markets in finance.

Other panel members at Sophie’s break out session included Xavier Rolet, CEO of the London Stock Exchange as well as a range of other senior financiers. Sophie provided perspective on the development of P2P lending for UK SMEs especially for committed term loans. She noted the increasing institutional interest in the sector and the increasing scale of SME lending which was becoming possible with this deeper pool of capital. Sophie gave the example of the loan Capital Engine had raised to support an MBI of a commercial cleaning business. The prospective purchaser could only afford to contribute a thin slice of equity to the MBI and traditional bank lenders were unwilling to lend without a larger equity cushion. Capital Engine raised the loan from ThinCats and its institutional contacts and thus enabled the MBI to proceed without the equity dilution for the purchaser which bank finance would have required. Eighteen months on the business has significantly increased sales, profits and employment and the value of the purchaser’s equity stake is transformed reflecting the risk he took and the drive and energy he has put into his business. We are delighted to have facilitated this entrepreneurial success story and to have enabled the ThinCats and institutional investors who participated in this secured loan a very satisfactory 12.75% p.a. return.

Expanding Team

17th May 2015

We are pleased to announce that Michael Watson has joined Capital Engine as a consultant. He has over thirty years of finance and business experience.

Michael qualified as a solicitor with Linklaters & Paines and then worked as an investment banker at Hambros Bank and UBS before becoming Finance Director to Lloyd’s members agency Christie Brockbank Shipton and its subsequent parent, CBS Insurance Holdings (a Lloyd’s conversion vehicle). He has also owned and managed an internet based retail business so has personal knowledge of the issues entrepreneurs face in financing their businesses.

Michael will focus on developing new sources for our SME credit arrangement business and transacting the loan opportunities generated. Christopher Rothschild, co founder of Capital Engine said ” I have known Michael for over five years and am confident he shares our approach to business as we seek to arrange and provide credit on sensible terms to high quality SME borrowers.

£1.5 Million raised in three loans for Business Lending Group (“BLG”) in the last six months

17th May 2015

Six months ago we were referred by an existing client to BLG which is a specialist lender to UK property developers. Established in 2003, BLG has a well-established team of 17 property lending specialists with over £60m of investments under management.

BLG were keen to expand their range of capital providers and the initial brief was to raise debt for one of its funds, (“BLSILP”) which mainly provides senior debt to small residential property developers. BLSILP had traditionally sourced capital from IFAs but recent reforms of trail commissions had weakened this channel to new capital. We have now arranged two loans for BLSILP totalling £1.1m.

The strong security package on offer meant that the management were (rightly) unwilling to pay the 10% + interest rates currently demanded by lenders on the ThinCats platform. We therefore introduced BLSILP to an institutional capital provider willing to accept lower interest rates for high quality credit assets.  This institution subscribed for £0.8m as a firm hold and underwrote £0.3m placement for ThinCats lenders willing to accept the below normal rates for a high quality offer.

The lending covenants limited BLSILP’s ability to efficiently pursue second lien, riskier (and thus higher return) ‘mezzanine’ loans. For its mezzanine lending opportunities, BLG therefore established a new vehicle ( BLG Mezzanine Co-Lending Ltd or BLG Mezz) whose purpose is to purchase a pool of participations of up to 75% of the mezzanine loans originated and monitored by BLSILP and other BLG companies. The sales of these higher yield positions thus enables BLSILP to retain the high quality asset cover demanded by its institutional lender. We have just raised a £0.37m 3-year loan for BLG Mezz from lenders on the ThinCats platform and look forward to raising further tranches later in the year.

Stuart Parfitt , Managing Director of BLG said “ Capital Engine were quick to understand our business and to devise structures which enabled them to raise capital from a number of sources within their network. They showed both flexibility and imagination and we are already discussing further projects”.

New capital coming into the P2P market

18th February 2015
The ThinCats platform has announced that ESO Capital Group has agreed to underwrite a series of large loans on the ThinCats platform with an initial expectation of £20m -£50m being deployed on ThinCats with potentially more thereafter. ESO Capital is a European special situations investment management group and has deployed over $500m in capital since its inception.
The first ESO underwritten loan (for £1.2m) is currently being syndicated out on the platform. Sophie and I met one of the London MDs of ESO Capital on 17 February and have an understanding of their pricing and open invitation to show them future loan opportunities.
ESO Capital is specifically targeting the ThinCats platform. Other institutional players in the wider P2P market include the Marshall Wace backed  P2P Global Investments which has raised £450 million. In addition GLI Finance have announced they are exploring the possibility of raising a Fund.
We believe the fundamentals of P2P lending are compelling and are delighted to see new capital entering our market. It enables borrowers to engage with P2P with greater confidence that funding is truly available.

NEW WEBSITE, NEW BRAND

16th February 2015

We are pleased to launch our new brand ‘Capital Engine’ which seeks to encapsulate our business’ aim ; helping UK SME businesses to source capital to drive their growth.

The reduced availability of loan capital from traditional providers is widely acknowledged . We have been successfully sourcing loan capital for clients for two years and are delighted in the testimonials they have given which underline our entrepreneurial and flexible approach. We always coinvest our own money in each loan we sponsor as we like to have ‘skin in the game’. We believe it means we share our borrowers’ enthusiasm for getting the loans raised and our lenders’ need for high quality credit assets.

We founded our business in 2013 with the intention of sourcing capital from the ThinCats P2P platform and our original name reflected this close association. As we are now establishing relationships with more of the new capital providers keen to access SME credit assets we are rebranding but we are delighted to continue our role as ‘accredited sponsors’ to the Thincats P2P platform.