Analysts question RateSetter sell price

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RateSetter’s low selling price to Metro Bank has led analysts to question whether the peer-to-peer lender is under pressure to close a deal.

Metro Bank was confirmed on August 3 to acquire RateSetter in a deal worth up to £ 12million, well below estimates of £ 25-50million originally issued.

Neil Faulkner, Managing Director of the P2P 4 analysis firme Way, pointed out that funders such as Woodford Investment Management and Artemis Fund Managers have invested at least £ 43.3million in the platform.

“If RateSetter is sold to Metro Bank for no more than £ 12million in total, and the founders of RateSetter are not allowed to strip their capital reserves, it looks like a terrible result for the current owners of RateSetter, ”Faulkner said.

RateSetter investors have valued the platform at over £ 200million. In April 2019, the platform revealed that it had secured £ 200million from ISA investors and that its total lending volume reached £ 4 billion earlier this year.

“The decision to sell the company at the height of the Covid crisis strongly suggests that there was pressure to close a deal,” said John Cronin, analyst at Goodbody.

“The news that RateSetter had entered into an exclusive deal with Metro Bank came a few months after the start of the sale process to our knowledge – so it is likely that there weren’t any better deals on the table at this time. moment. “

Faulkner said the Covid-19 flaws could have impacted RateSetter’s selling price, but suggested that “the selling price has less to do with Covid-19 flaws and more to do with profitability of the P2P lending industry itself “.

“Being an investor who buys shares in some P2P lending companies could be quite similar to being an investor in airlines or car manufacturers,” Faulkner added.

“All three industries make incredibly useful products that are wonderful for their consumers. In the case of P2P lending, its consumers are the lenders and the borrowers.

“But, over the very long term, the airline and automotive industries have made disappointing investments for their shareholders. This is because, overall, the bulk of the rewards from these industries have gone to consumers, not their owners.

“The P2P loan could be the same. “

Read more: Is this the end of the road for unsecured P2P consumer loans?

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