Peer2Peer Finance News May 2019 by Alternative Credit Investor

>> 7

OUTLOOK UNKNOWN

Future of P2P trusts in doubt MITIGATING RISK

What platforms are doing to protect investors

>> 18

Ablrate’s David Bradley-Ward on his global blockchain ambitions >> 24

ISSUE 32 | MAY 2019

Surveyors eschew P2P property lenders on insurer concerns SURVEYORS are avoiding working with peer-topeer property lenders due to fears of multiple negligence claims. Peer2Peer Finance News understands that professional indemnity (PI) insurers are reticent to issue policies for surveyors working with P2P property lenders, due to concerns that an issue with one loan could trigger several claims from individual investors. The challenge in obtaining PI insurance is dissuading some surveying firms from working with the P2P sector. An email sent to P2P property lender LandlordInvest from Colliers Valuation and

Advisory Services, seen by Peer2Peer Finance News, revealed that the surveying firm will not work with P2P lenders. The email said that LandlordInvest’s request for a valuation had been passed to its internal risk

team for review but that Colliers’ policy was that it was unable to act for P2P lenders. “We have never had such a response from any valuer, or any other company in any other industry,” said Filip

Karadaghi, chief executive of LandordInvest. “It is quite surprising. “It is quite significant as there has been a lot of criticism regarding valuations on other P2P platforms and it is surprising to see that one of the leading valuers has shut the door to platforms. This is preventing platforms and lenders from benefitting from professional services provided by an established company.” Michael Lynn, chief executive of P2P property lender Relendex, said he has come across similar issues. “We use a wide range of valuers,” he said. “If they don't want >> 4

Platforms report IFISA growth despite bad press PEER-TO-PEER lenders have reported a rise in Innovative Finance ISA (IFISA) inflows this ISA season, although there are concerns that bad press in the lead-up to the end of the tax year dampened investor demand. Industry figures have suggested that

the collapse of mini-bond provider London Capital & Finance and a Financial Conduct Authority warning on “high risk” IFISAs could have made consumers wary about investing in the crucial days leading up to 5 April. One industry source told

Peer2Peer Finance News that his platform had seen muted growth in IFISA inflows at the tail-end of ISA season, which he attributed to the bad publicity surrounding the sector. Adrian Lowcock, head of personal investing at Willis Owen, pointed out that

the last few days before the end of the tax year are vital for ISA inflows. “There is a general trend that shows the last couple of weeks usually see an uplift in ISA demand,” he said. “It is just human nature – we tend to leave things to the >> 4 last minute.”

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EDITOR’S LETTER

Published by Royal Crescent Publishing

WeWork, 2 Eastbourne Terrace, Paddington, London, W2 6LG info@royalcrescentpublishing.co.uk EDITORIAL Suzie Neuwirth Editor-in-Chief suzie@p2pfinancenews.co.uk +44 (0) 7966 180299 Kathryn Gaw Contributing Editor kathryn@p2pfinancenews.co.uk Marc Shoffman Senior Reporter marc@p2pfinancenews.co.uk Andrew Saunders Features Writer Danielle Levy Features Writer Hannah Smith Reporter PRODUCTION Tim Parker Art Director COMMERCIAL Craig Levick Director of Sales and Marketing craig@p2pfinancenews.co.uk Tehmeena Khan Sales and Marketing Support tehmeena@p2pfinancenews.co.uk SUBSCRIPTIONS AND DISTRIBUTION info@p2pfinancenews.co.uk Find our website at www.p2pfinancenews.co.uk

’m not going to bore you with more talk of default rates, investor marketing and economic downturns in this month’s editor’s letter. Instead, let’s look ahead to the next wave of peer-to-peer lending innovation. P2P began life offering consumer loans (as our feature explains on page 10) but has since diversified into business lending, other types of assetbacked lending and a plethora of property finance products. We’ve seen a number of interesting new entrants to the market, such as Lend & Borrow Trust, which uses the P2P model to offer loans secured by precious metal holdings. One industry source recently told me about a conversation they had regarding the possible launch of a P2P product specifically focused on the shipping industry. We could see infrastructure projects such as bridges and motorways financed by P2P loans in the future, the source added. And why not? This would open up even more opportunities to direct investment and enable everyday investors to benefit from the types of funding deals that were previously the sole preserve of City institutions and very wealthy individuals. Furthermore, by diversifying across more industries, the industry can even better mitigate risk (another shameless plug for one of our features – see page 18) in uncertain times. Win-win! SUZIE NEUWIRTH EDITOR-IN-CHIEF

Printed by 4-Print Limited ©No part of this publication may be reproduced without written permission from the publishers. Peer2Peer Finance News has been prepared solely for informational purposes, and is not a solicitation of an offer to buy or sell any peer-to-peer finance product, or any other security, product, service or investment. This publication does not purport to contain all relevant information which you may need to take into account before making a decision on any finance or investment matter. The opinions expressed in this publication do not constitute investment advice and independent advice should be sought where appropriate. Neither the information in this publication, nor any opinion contained in this publication constitutes a solicitation or offer to provide any investment advice or service.

Have you signed up to our e-newsletters yet? You can receive P2P news straight to your inbox five days a week, or sign up for our once-a-week version that comes out on Wednesdays. Go to www.p2pfinancenews.co.uk for more information.

NEWS

cont. from top of page 1 to act [for us] we use another firm. But it really depends on their insurers. “Insurers seem to be concerned that in the event of a PI claim, the insurer might be faced with multiple small claims from individual lenders. “That would not happen in Relendex's case because we act as an agent for the whole lender group

and would bring any PI claim on behalf of all lenders participating in a particular loan. “Our own advisers have suggested a minor change to our terms and conditions which should satisfy insurers.” Insurance brokers have confirmed that it is the risk of multiple claims that is putting off PI providers

and surveyors. “There are many risks to consider with regards to the surveying of P2P properties but on the subject of multiple claims there is the risk of a ‘per claimant’ deductible or excess which means the surveying firm would be liable for a fixed amount, sometimes in the thousands for each

individual claim,” Brendan Murphy of Peacock Insurance Services, said. “As an example, 100 individuals investing in a P2P property who start a class action could be catastrophic for a surveying practice.” Colliers Valuation and Advisory Services did not respond to requests for comment.

account, there could now be close to £1bn in IFISAs, suggested Downing’s head of digital distribution, Ceri Williams. He noted the average value of IFISA investments has remained fairly stable at around £12,000 to £13,000 over the past year. “This is interesting as it just bumps along at a very consistent rate,” said Williams, adding it is a high proportion if someone has the whole £20,000 ISA allowance to invest.

Meanwhile, the number of IFISA accounts has been rising steadily over the last year from 18,885 to 51,371. Williams said that Downing’s own IFISA inflows were in line with expectations, although “we’d like a little bit more”. “The market is getting very competitive with 91 IFISAs now available, so it is a congested space that everyone wants to go after,” he said. With regard to recent bad press, Williams added: “There is a popular

misconception that all providers are in the same bucket and tarnished with the same brush, which doesn’t help in a competitive environment.” Although negative headlines may have stalled IFISA sales to some extent, Lowcock noted that this ISA season in general is expected to have been quite muted compared to other years, with Brexit uncertainty and global growth fears weighing on investor sentiment.

cont. from bottom of page 1 However, some P2P lenders have still reported substantial growth in IFISA inflows, even if bad publicity were a tailwind. On 4 April, RateSetter reported it had attracted £200m in subscriptions. The platform subsequently said that it had attracted a few million pounds more in IFISA inflows in the two weeks following 4 April. Industry-wide figures from investment trade body Tisa show that, between 5 April 2018 and 5 March 2019, the value of IFISAs rose by about £469m to £652m, representing a more than 250 per cent increase. However, this figure excludes April as it is calculated a month in arrears. It also excludes Funding Circle, which now has the reporting restrictions of a listed company. Taking all this into

VALUE OF IFISAS (Source: Tisa)

£536,106,600 £410,605,498

£581,077,287

£599,413,613

£652,124,324

£624,754,561

£560,308,026

£436,436,747 £460,015,662

£376,919,787 £256,367,256 £183,404,416 05/04/18 05/05/18 05/06/18

05/07/18

15/08/18

05/09/18

05/10/18

05/11/18

05/12/18

05/01/19

05/02/19

05/03/18

NEWS

Funding Circle still offers manual lending in other markets FUNDING Circle is still offering investors the option to self-select their loans in its three overseas markets, its annual report revealed last month. The peer-to-peer business lender scrapped its manual lending option in the UK in 2017, saying that its auto-invest product ensures better diversification. “We want to ensure investors lending through Funding Circle have an equal chance of accessing all loans, and earn the best possible return,” the company said at the time.

In its first annual report – a prerequisite of being a listed company – Funding Circle said

that “all institutional and retail investors, with the exception of retail investors in Germany

and the Netherlands and accredited investors in the US, invest passively through our platform.” A Funding Circle spokesperson said that the disparity was simply because the UK is its most mature market. “A passive-only approach is the most suitable for our UK product due to the size and scale of the platform,” the spokesperson added. “For example, we have 79,000 retail investors in the UK compared to under 5,000 in the Netherlands and Germany.”

City watchdog rejects Mintos application LATVIAHEADQUARTERED peer-to-peer lender Mintos has been refused regulatory approval in the UK, three years after its initial application. The Financial Conduct Authority (FCA) said that it was not satisfied that the platform had the appropriate resources to implement its proposed business model in the UK. The FCA also said that Mintos had “not provided sufficient evidence to demonstrate that it will adequately capitalise its business” and had

not shown that its head office would be based in the UK, in line with regulatory requirements. Mintos has offices in Spain, Germany, Poland, Latvia and the Czech Republic. The lender first applied for UK authorisation in March 2016, before amending a number of its policies in line with FCA guidance. In March 2018, Mintos changed its application to include permission to operate an electronic system in relation to lending.

This would have formed the basis of its P2P lending platform, whereby borrowers and investors could enter into unsecured loan transactions, with a focus on short-term credit solutions. This model is similar to the Mintos Latvia platform, which is also currently unregulated. However, in the course of assessing the firm’s UK application, the FCA concluded that Mintos was not “sufficiently ready, willing and organised to undertake its proposed business compliantly.”

“The policies and procedures that [Mintos] has provided to the Authority to date fail to set out in sufficient detail the practical steps and approaches that [Mintos] will need to take to implement its proposed business model compliantly,” said the FCA. “Three of the key areas where the firm’s policies and procedures are inadequate relate to creditworthiness assessments, arrears handling and winding down the firm’s business.”

For even more peer-to-peer finance news, go to our website at www.p2pfinancenews.co.uk. With real-time news and exclusive insights, www.p2pfinancenews.co.uk is your indispensable portal into the world of peer-to-peer lending. Go online to sign up to our e-newsletters, for a comprehensive digest of the latest peer-to-peer finance news sent straight to your inbox. You can choose our weekday e-newsletter, which comes out by 7am Monday to Friday, or sign up for our once-a-week version that is sent out at noon on Wednesdays. www.linkedin.com/company/peer2peerfinancenews/ @p2pfinancenews

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NEWS

Future of P2P investment funds in doubt FUNDING Circle’s dedicated investment trust is set to close, raising questions about the future of peer-to-peer lendingfocused funds. While P2P platforms themselves have demonstrated impressive growth in recent years, investment trusts have been scaling back their exposure to the sector following poor performance. Victory Park Capital (VPC) Specialty Lending Investments has been winding down its P2P portfolio in favour of balance sheet loans. Meanwhile, the sector’s first dedicated fund, P2P Global Investments, has been moving towards different forms of assetbacked finance. It was revealed in April

that its legacy Zopa portfolio was dragging on returns. The Funding Circle SME Income Fund said last month that it is set to close amid rising hedging costs and the impact of new IFRS accountancy reporting requirements. “I have always believed

P2P will develop into a mature and successful industry, however there have been concerns, which I share, that it is still a young and relatively untested sector,” said Adrian Lowcock, head of personal investing at fund platform Willis Owen. “If big institutional

investors are withdrawing then they are likely concerned the return no longer justifies the risk.” However, Neil Faulkner, co-founder of P2P analysis firm 4th Way, argued that many P2P platforms are now doing the job that these funds were set up to do. “Many P2P platforms already provide easy diversification, which is the key role of investment trusts, OEICs and unit trusts,” Faulkner said. “So, the closure of the Funding Circle SME Income Fund is no great loss to retail investors, while institutional investors are also doing fine by taking part in the industry in other ways. Investment trusts come with additional volatility risks too.”

The best from the web

We round up the biggest stories from www.p2pfinancenews.co.uk over the past month • OUR readership has been fascinated by the fallout from the Financial Conduct Authority’s (FCA) Innovative Finance ISA (IFISA) warning, which came just before the end of the financial year. The industry – unsurprisingly – hit back at the regulator’s

statement, which urged consumers to “carefully consider where their money is being invested” before purchasing the “high risk” product. • There’s nothing like an executive pay story to attract attention, and last month it emerged that Funding Circle

founder Samir Desai earned more than £4m in 2018, having cashed in some of his shares when the company went public. • At Lendy, the leadership team was in a decidedly different state. A Peer2Peer Finance News investigation found that a number

of staff members had quietly left the firm, amid ongoing concerns around the viability of its loanbook. • It was a good month for equity fundraises in the sector, with both CapitalRise and CrowdProperty smashing their targets on Seedrs.

JOINT VENTURE

The numbers don’t lie

Crowd2Fund has exceeded its own target rates while offering more choice to investors. Chief executive Chris Hancock reveals how they did it…

OST PEER-TO-PEER lenders are satisfied with offering investors inflation-beating returns of between three and six per cent. Not Crowd2Fund. On its website, the platform says that it targets average returns of between six and 15 per cent before fees and bad debt, placing it among the highest-paying P2P lenders in the UK. In fact, according to its latest fund statistics, Crowd2Fund delivered an average annual return of 10.33 per cent APR at the end of March 2019, before fees and bad debts. It has done this by giving investors more choice, offering a range of different loans and investment types on its platform. The fund statistics also showed that since its launch in 2014, Crowd2Fund has received £29.44m in investments through its platform, with £2.29m paid out in interest. According to Chris Hancock, chief executive of Crowd2Fund, the vast majority of these funds have been invested within the platform’s Innovative Finance ISA (IFISA) wrapper. “What’s important about these statistics is that this is a new financial product and it's important that people recognise that it's different to a savings account,” he says. “The IFISA is more like a stocks and shares ISA in that it fluctuates depending on your investment choices. But the firm statistics that we have provided show the overall average performance of the fund, which is actually very good.” Indeed, Crowd2Fund has

calculated that even in a worst case scenario, 92.23 per cent of the platform’s investors will have made money through their portfolio once all non-default loans have been repaid. In reality though, Crowd2Fund aims to recover 60 per cent of defaults, so the number of investors who will avoid losing money should be much higher. Any lending business would be thrilled with these sorts of figures, but for Hancock it is simply “an ongoing improvement”. “The more loans we issue, the more we can learn,” he says. “We only plan to improve on the existing diligent credit investment process. “But what's really reassuring from my perspective as a founder is that I think we've got a genuine, honest and transparent track record now where investors can have more confidence in the returns that they can expect.” Crowd2Fund takes a unique approach to its credit assessment process, combining an in-house

assessment by its credit team with a highly specialised AI programme. “It's about a revolutionary approach to credit assessment,” says Hancock. “And very thorough due diligence, but also the transparency that comes with the fact that every loan goes out to our community of 7,500 investors, all of whom scrutinise every deal and every loan as well. That’s a revolutionary approach to lending.” Hancock adds that it is “really important” for investors to conduct their own due diligence, and the platform provides a wealth of investment information to help its investors make the most balanced decision that they can. To date, Crowd2Fund has issued 360 loans, each one of which has been subject to this rigorous three-part due diligence process. As the platform continues to grow, its high returns and stringent credit checks will help to win over a new generation of P2P and IFISA investors.

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NEWS

What is the best provision fund structure? PROVISION FUNDS are designed to cover peer-to-peer investors in the event that a borrower defaults on their loan, but the way they are funded and operated varies widely across platforms. So what should investors be looking for and is there an optimal structure to reduce their chances of losses? One key difference is whether pay-outs from reserve or provision funds are automatic or discretionary. RateSetter is credited with the invention of the provision fund concept, which has been part of its business model since it launched in 2010. It is funded by borrowers’ repayments and money is automatically reimbursed to investors if loans go into arrears. “We manage the size of the provision fund so that there is more money in there than all the expected missed payments by borrowers,” RateSetter said on its website. “We continually monitor the performance of loans and our provision fund and if needed we can make adjustments.” Growth Street’s chief executive Greg Carter said that its provision fund is a key component of the platform’s investment proposition, adding liquidity which is vital for the revolving lines of credit it offers businesses. Its pay-out mechanism is automatic, using an internal counterparty rather than a discretionary trust, and kicks in even before a borrower has defaulted, as soon as they are 30 days late with a payment or even if it looks like they will not be able to repay.

Interestingly, it is partially funded by capital from the platform’s founders, which Carter said aligns their interests with those of their customers. “What the provision fund does is put skin in the game and means if we make bad decisions, we pay for those before investor returns are affected,” he said. In contrast, Landbay’s provision fund is less central to its offering, according to chief executive John Goodall, who pointed instead to the low-risk nature of the platform’s loans. The provision fund is discretionary, so there is no guarantee an investor will see bad debts repaid from it, but loans are secured against property, meaning they will usually get something back in case of default. He argues a provision fund cannot call itself automatic as, by definition, it could run out and so is not guaranteed. Discretionary payments may also be slower: in December, Lendy apologised to customers for

delays to discretionary pay-outs on some bad loans. Should provision fund mechanisms be standardised across the industry to make them easier for investors to understand? “I would welcome standardisation," said Carter. "I would hope it wouldn’t require regulation, but if that’s what it takes then great." But Goodall said this would not take into account the differences in the way P2P lenders operate, and whether loans are secured. “To force them all to run in the same way would not be good for consumers,” he added. Goodall said a better assessment of the safety of a P2P platform is to look at the whole offering, the underlying loans and the rates on offer, rather than the provision fund itself. It must be noted that a provision fund is a method of mitigating risk, but does not guarantee that investors’ capital is safe. For more on mitigating risk, read the feature on p18.

CONSUMER LENDING

In the beginning…

Consumer lending is the oldest segment of P2P, but can it retain its competitive edge against newer and bigger types of P2P finance? Andrew Saunders reports

ONSUMER LOANS MAY have been the original peer-to-peer product, but are they still the best? When Zopa first started cutting out the banking middleman back in 2005, bringing together investors seeking better returns with borrowers seeking a quicker and more hassle-free way of funding that new kitchen, TV or car, there was nothing else like it around. Fast forward a decade and a half and the landscape has changed considerably. Consumer

lending is by no means the only – or the biggest – kid on the P2P block any more. The latest annual UK Alternative Finance Industry Report, compiled by the Cambridge Centre for Alternative Finance (CCAF), found that business lending made up the largest share of the P2P market as of 2017, followed by consumer lending, with property finance a close third. Throw in the fact that for many mainstream investors, the razzmatazz surrounding Funding

Circle’s initial public offering was their first exposure to a P2P lender, and a model which started out serving consumers now seems to have morphed into one that is becoming better known for its business credentials. It’s a shift that is at least partly explained by the differing nature of the assets involved, says Jake Wombwell-Povey, chief executive of direct lending investment manager Goji. “Business lending is on the rise because individual investors are drawn to business

CONSUMER LENDING

and property loans,” he comments. “They tend to be asset backed and have more security.” He argues that security is particularly appealing to retail investors because, in the absence of Financial Services Compensation Scheme guarantees, loans secured against an asset like

right, and then once the formula is correct to try and amplify it. That focus is very valuable.” Although RateSetter has diversified into other types of loans, its original consumer product still accounts for the lion’s share of its loanbook. In comparison with younger

“ There is a bigger market of consumers, you just have to offer a better product”

a warehouse or factory can seem like a better place to put your hard-earned cash. “These are not the kind of investors who want to spend their time analysing credit risk,” he asserts. “But they do understand bricks and mortar.” Wombwell-Povey thinks that business lenders have taken lessons in how to promote themselves from the consumer lenders that predated them. “There is still growth in consumer lending, but other parts of the market are getting more fluent in marketing what they do to consumers,” he says. On the other hand, the consumer lenders’ head start in the market means they are now more mature businesses, says Peter Behrens, co-founder of ‘big three’ platform RateSetter, which started life as a P2P consumer lender before diversifying into business and property finance. “We diversified much earlier and more aggressively than some,” says Behrens. “We tried lots of different lending verticals and dabbled in different ways of raising the funding supply too. “Some were brilliant, some not so much. But it has given us the focus now on how we can relentlessly grow the business. Our instinct is to get the product

platforms, RateSetter (and the other ‘big three’ platforms Funding Circle and Zopa) have had more time to establish both their individual models and their market positioning relative to one another, he adds. “I think that the three of us are all focussed on something slightly different,” says Behrens. “Funding Circle wants to be the best small business lender in the world. Zopa considers itself to be the best consumer lender in the UK, while we at RateSetter are focussed on being the best retail investment

product that can get its hands on these types of assets.” So the ‘big three’ may not all compete directly for borrowers, but they do compete for investors, and each has a distinct offering. The important point, says Iain Niblock, co-founder and chief executive of P2P investment manager Orca Money, is that investors can and should include both consumer and business lenders in their portfolios rather than trying to make a decision on which is best. “There are good quality assets to be had in consumer, business and property lending and it’s good to have investments split across the three sectors,” he explains. While much of the attention may be on business lending at the moment, the intrinsic strengths of consumer lending remain. “There is a bigger market of consumers, you just have to offer a better product,” adds Niblock. “The returns in consumer P2P lending are actually growing. “With consumer lending you get a lot more loans in your portfolio

CONSUMER LENDING

[for a given sum invested] because each loan is smaller, so you get more diversification.” However, Niblock predicts that P2P consumer lenders will increasingly face rivals from outside the sector. “What’s going to impact P2P is when the challenger banks start lending,” he states. “Take Marcus from Goldman Sachs – they have taken huge deposits, what’s going to happen when they start lending to consumers?” The challengers may prove tough to beat: P2P platforms have to provide a return to their investors, whereas deeper-pocketed challenger banks can afford to buy market share with loss-leading rates, at least in the short term. P2P lenders must also manage the perpetual balancing act of matching the demand for loans from borrowers with the supply of funding from investors, an issue that tends to become more rather than less complex as the size of the business increases. Of the ‘big three’, only RateSetter remains fully focussed on retail funding. Zopa’s P2P investment is now approximately two thirds institutional money and one third retail. Concerns have also been

highest levels since 2011, with Individual Voluntary Arrangements (IVAs) at the highest annual level

“ It’s about delivering the product in the way [consumers] want” expressed that Brexit-related fears over the economy may hit both consumers’ appetite to borrow and their ability to repay, with negative consequences for origination levels and default rates. Figures released by the Insolvency Service for 2018 showed that personal insolvencies rose 16.2 per cent to reach their

ever recorded. It’s not something that RateSetter has seen any sign of so far, says Behrens. “A decent sized unsecured personal loans book – which is what we now have – is an interesting bellwether for what’s going on in the world. We see no signs of any stress in it at all.”

He’s equally sanguine on Brexit. “I’m an optimist, so despite the ever-increasing sense of woe around Brexit I think that ultimately humans rebuild stuff – solutions will be found,” he adds. He’s careful to note that there is no cause for complacency, but also points out that if and when it does come, a bit of economic turbulence could actually be a good thing. One of the most often-repeated criticisms of P2P is that it has not yet proven its mettle through a full economic cycle. “We’ve designed our product to manage the risk of changing economic conditions,” Behrens affirms. “That’s what we have set

CONSUMER LENDING

“

There is more we can do as a sector to innovate further

”

out to do, but we need to prove it. If we can do that in the course of this financial year it could be a real tipping point, where the growth rate in the business goes up absolutely enormously.” P2P may have its challenges, but providing alternative consumer products is pretty tricky too. Let’s not forget that Zopa is launching a bank, a substantial undertaking driven in no small part by the flexibility to offer new products such as credit cards that having the buffer of a bank’s balance sheet brings. One new entrant that reckons it can square the circle and provide a short-term credit-card style product

via a P2P platform is Elfin Markets, a start-up founded by former Goldman Sachs banker Mansour Bouaziz. Due to launch shortly, Elfin will offer customers what amounts to a consumer version of a commercial revolving credit line – a credit account rather than a credit card, called the Elfin Purse. “We’re the first in the UK and probably the first in the world to offer this,” he says. “Credit cards are a big part of the credit market but the prices are atrocious. The average APR is over 20 per cent. Our representative APR is 5.8 per cent.” What makes him think he can succeed where others have feared to tread? “At Goldmans Sachs I was involved in liquidity management, managing the cash the bank needed to have on hand to meet its clients’ requirements,” he says. “What we’re doing at Elfin is not that different – making sure we have enough cash to meet borrowers’ needs, but not too much. It is investor’s money and they expect it to be earning a return.” He also thinks that the P2P sector as a whole is in need of some fresh thinking to unlock the next phase of growth in the consumer market. “There is more we can do as a sector to innovate further,” he states. “The tech hasn’t evolved that much in the past five years and the sector is also missing people who innovate on the finance side. “We are more finance than tech – it’s the same thing that investment banks do for their clients, and

investment banks are not very good at technology.” Founded in 2016, The Money Platform is also a short-term consumer lender, targeting loans of a few hundred pounds for terms of four to seven weeks for underserved millennial customers. “The millennial generation is very poorly served by traditional lenders and credit agencies,” says chief executive Joshua Graham, because their credit record is typically not strong enough to meet the standard requirements. “Under-35s tend not to have a mortgage, car finance or a credit card,” he explains. “They have not lived in the same place for three years. That doesn’t make them a bad risk – we just analyse the data in a new way.” Costs are kept low by a fullyautomated loan process that engages with customers in their preferred manner. “We give a yes or no in seven seconds, and if it’s yes then the money is delivered electronically,” says Graham. “It’s about delivering the product in the way they want. On their mobiles, and without talking to anyone unless they actually want to.” So consumer lending may have slipped out of the spotlight to some extent lately, but for investors there are still plenty of reasons to be cheerful, and plenty of options for their investment portfolios. “We have just signed off on our business plan for the coming financial year, and it basically says that we are determined to keep doing what we are doing, and keep growing,” says RateSetter’s Behrens. “There is a feeling that the world is a little less settled than it was three years ago, so I think that sticking to your knitting and trying to chart a sensible course is probably no bad thing.”

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Focus on security, not risk Angus Dent, chief executive of ArchOver, explains the importance of solid security

ISK IS OFTEN SEEN AS a dirty word. Those who don’t understand it often feel instinctively that it’s something they should avoid. But it takes risk to make money. Those with no risk may have nothing to lose, but they have nothing to gain, either. Risk is something that lenders need to take on to make it worth their while – the question is, as a lender, how do you know how much risk you can take on? First, change your focus from risk to security. Risk is a nebulous concept, but security is solid, it’s tangible. When you’re deciding whether or not to back a loan, don’t look at the risk involved, at the shadows – look at what is tangible. What is the loan secured on? How has the company proved its ability to pay back the loan? Take the time to investigate how that security’s been taken by the facilitator and how it’s been enhanced. Security is what protects your money – an acceptable level of risk is one that’s balanced out by solid security. Solid security is security that matches the loan. There are more imaginative ways to take security than asking the chief executive

“ Risk is a nebulous

concept, but security is solid

”

to put his house up against his company. By way of example, if the facilitator leverages an overarching assignment on contracted revenues, the resilience of the security is tied to the company’s ability to repay. If they can’t prove that ability, they don’t get the loan in the first place because they can’t offer sufficient security. That double layer of reassurance is far better than a Hampshire pile. Ask whether the security in place is real and appropriate. Lots of lending these days is done with minimal credit analysis and based on a personal guarantee. But in business lending, a personal guarantee doesn’t say anything

about the health of the business. The fundamentals of security should be whether the company can afford the loan. Can it pay it back? Can it pay the interest? The size of the owner’s house doesn’t affect that at all – so it’s not an appropriate piece of security. And it’s hard to turn a house into cash quickly – if the balloon goes up, you don’t want to have to turn estate agent before your lenders get their money out. It’s the same thing if you’re trying to secure a short-term loan against a building. That wouldn’t be appropriate security either, which is why bridging is so expensive – to mitigate the risk. A building doesn’t turn into cash quickly, whereas a sales invoice does. It’s not just about what the security is, it’s about the appropriateness to the loan. Getting the lenders repaid when they’re supposed to be is a key part of security – it’s about the timing as well as the amount on offer. The bottom line here is that the best kind of security is a company with a strong business model that can afford the loan. In turn, that means you need a good facilitator with strong credit analysis to select those companies and ensure they’re being managed well. Before you decide how much risk to take on, investigate the security and credit analysis behind the loan – don’t set sail in a leaky boat.

MITIGATING RISK

Nothing ventured, nothing gained Risk and returns go hand in hand, so how do peer-to-peer lenders offer competitive returns while protecting their customers? Marc Shoffman investigates

ISK IS AN UNAVOIDABLE component of investing and peer-to-peer lending is no exception. The collapse of Collateral, rising arrears at platforms such as Lendy and concerns about the way Innovative Finance ISAs (IFISAs) are promoted to consumers have shone a spotlight on the risks of investing in the sector. With any investment, it is widely acknowledged that higher returns come with higher risks, and the P2P sector’s competitive returns are particularly attractive when compared to paltry savings rates. However, it is important to

note that P2P is an investment product, not a savings product, and to ensure that the specific risks within the sector are clearly understood by investors. There are three major risks when investing in P2P: defaults, platform management and the wider economic environment. “Providing you spread your investment over a large number of loans, credit risk relates to a number of borrowers defaulting on their loans,” explains Iain Niblock, chief executive of P2P analysis and investment firm Orca Money. “If the default rate rises above the interest rate you may lose capital.

“The P2P platforms themselves also pose a risk to investors. Your investment would be affected if a P2P platform were to become financially unstable, suffered a cyber-attack or if fraud existed at the platform. “Finally, there is a macroeconomic risk, similar to other investments such as listed products. “However, unlike listed investments the impact of an economic downturn would not be felt immediately. “Instead unemployment rates would rise, businesses may go out of business and property prices may fall, all factors that would affect

MITIGATING RISK

borrowers within the P2P market.” When it comes to platform management, Frank Wessely, partner at business advisory firm Quantuma, says platforms must assess how much capital they need to operate and work out the actual demand for their product. “We often see businesses that are under capitalised and underestimate how much capital is required to

“ There’s no such

thing as a risk-free investment

”

fund longer-term investment and expansion,” he says. “The other aspect we see as a major cause of difficulties for business is inadequate management capabilities, experience or skillsets. “It is a bit of a fallacy that someone is suitable to set up a business simply because they have previously worked in a particular role or industry. “Platforms also have to consider if their products are solving problems currently faced by investors and are something the market wants, or the business is unlikely to be successful.” All platforms will have various policies on underwriting and assessing borrowers in order to keep default rates down. For example, Darren Cairns, chief marketing officer of business lender LendingCrowd, says the platform combines risk modelling and human interaction for the final lending decision. “We focus on the borrower’s ability to repay their loan and only lend to established and creditworthy businesses that have been approved

by our credit team,” Cairns said. “When assessing a loan application, we look for proven management ability, a strong and considered business plan and the ability to meet repayments. “We are a fintech business, with a proprietary risk band modelling tool, but the personal approach is still important – a human always makes the final lending decision. Investors need to remember that their capital is at risk when lending to business, and only invest if the risks match their appetite.” The lending segment in which a platform operates will also have an impact on its risk profile. “We follow the typical process for a buy-to-let mortgage,” John Goodall, chief executive of Landbay, says. “We treat borrowers like a business and look at the costs and cashflow attached to buying and renting out a property. “We also value the property with independent valuers and do fraud checks. “Rather than benchmarking ourselves against other P2P lenders

we are more similar to other buy-tolet providers, just quicker.” However, Orca Money’s Niblock warns that most platforms are not so public on their underwriting processes, making it harder to assess how risky the loans are. This brings us to the main weaponry for an investor, a platform’s statistics page. “It is very difficult for a retail investor to assess the underwriting processes of a P2P platform as this information is generally not in the public domain,” Niblock says. “In the absence of physically visiting a P2P platform and sitting down with the appropriate people, investors can review the statistics pages of the P2P platforms. “Although this does not offer an understanding of the underwriting processes it does give an indication of credit performance. “Defaults are expected and the magnitude of defaults generally relate to the credit quality that the P2P platform is targeting. If defaults fluctuate between the years, or do not meet the platform’s original estimates, we can assume

MITIGATING RISK

that these are not expected and may be the result of poor underwriting processes.” Investors can help mitigate the risk of defaults with diversification, ensuring their money is spread across different loans and even different platforms. However, diversification can be a little more challenging if a platform purely offers a manual lending function. In this case, investors choose their own loans and are responsible for their own due diligence and diversification. Other platforms offer autolending functions which automatically allocate funds across a number of loans, ensuring diversification with less effort. For example, auto-lending platforms such as Zopa, Funding Circle, RateSetter and Lending Works break investors’ money down into small chunks and spread it across different loans, so that one default doesn’t create major losses in a portfolio. But David Bradley-Ward, chief executive of manual lending platform Ablrate, suggests auto-lending isn’t the panacea for P2P risk. “Diversification is a good mitigant for risk, but that should also be across sectors,” he states. “If you invest in 100 chip shop

Sophie Pearce, managing director of manual P2P lender MoneyThing, echoes Bradley-Ward’s comments. “Manual lending is best suited to lenders that have the time to choose their own loans and manage their own risk,” Pearce explains. “The gross interest rates are much higher than the discretionary fund models, so if you have the time, you can get a better return by diversifying your lending yourself.”

“ Diversification is a good mitigant for risk, but that should also be across sectors”

loans and suddenly everyone wants salad and not fish and chips, your diversification won’t really matter. The auto-invest platforms are great for ease of use if that is your main criteria, but a little work on manual platforms with good secondary markets can produce great results as well.”

Others, such as LendingCrowd, offer a choice between the two. Cairns of LendingCrowd says auto-investing offers a quick and simple way of diversifying a portfolio, while self-select can work for more sophisticated investors who have the time and knowledge

to review individual borrowers and build their own portfolio. “There’s no such thing as a riskfree investment, but diversification is the easiest way to manage risk and improve your opportunity for better returns,” he says. “We believe that investors appreciate the choice between automatic and manual investing, so we continue to offer both options. We work hard to make investing with us as easy as possible while maintaining a diversified portfolio.” Pearce adds that risk profiles on manual and auto-lending platforms can still be similar. “Lenders can diversify by selecting loans themselves on manual lending platforms like MoneyThing, where gross interest is around 12 per cent, or invest in an auto-invest or account product where gross returns are six to seven per cent,” she says. “The key thing to remember

MITIGATING RISK

the rate, security and defaults. The industry’s relative nascence – namely the fact that most P2P lenders were not in existence during the last downturn – is commonly cited as a risk to the industry’s future outlook. However, some of the larger platforms such as Funding Circle and Landbay have stress tested

The Financial Conduct Authority (FCA) has highlighted its concerns about the sector, warning that investments held in IFISAs are “generally high-risk with the money ultimately being invested in products like mini-bonds or P2P investments.” The industry has criticised the City regulator’s warning,

“ If you look where there has been issues, it’s where there hasn’t been institutional investment”

is that borrowers can still pay similar rates of interest and meet the same risk profiles as the manual lending option. “This is because the account products need to take cash-drag and liquidity into account.” Platforms offering asset-backed loans also highlight the underlying security as a way of mitigating risk, although there is no guarantee that the asset can be sold in the event of a default. Bradley-Ward adds that it is important to ensure the security is registered properly. He says the documents listed in a proposal should be registered at Companies House and any charge should have a deed of priority. “If it doesn’t you should be sure you are being compensated by a low overall LTV or a high interest rate or both,” he adds. There are other ways of judging the riskiness of a platform beyond

their loanbooks and published the results, with investors still predicted to make a profit in the event of a financial crash. Goodall says stress testing shows platforms are prepared. He also suggests institutional backing can provide a seal of approval on the way a platform approaches risk. “Having institutional investors on a platform is a huge positive, at least you know they have been through a serious due diligence process,” he adds. “If you look where there has been issues, it's where there hasn’t been institutional investment.” However, retail investors must also take some responsibility in the decision-making process. Wessely says investors should remember that P2P lenders aren’t advising on loans and are merely promoting them. “Platforms are putting potential loans up to be filled, and perhaps investors are coming at it from a perspective that it’s a recommendation, but the final judgement is for the investor,” he says. “An investor needs to be able to make a distinction in their own mind.”

suggesting that it is unfairly tarring the P2P industry with the same brush as less-regulated mini bonds, in the wake of the high-profile collapse of mini bonds provider London Capital & Finance. “I understand why the P2P community has reacted the way it has and criticised the FCA for not drawing sufficient distinctions between mini bonds and P2P and also the different types of P2P products,” Wessely says. “A more specific detailed comment is needed to clarify this statement and draw a distinction between mini bonds and more traditional P2P products.” The latest FCA statement follows last year’s proposals to introduce investor marketing restrictions and more transparency to help manage risk in the sector. The P2P industry has never shied away from admitting there are risks involved, and as with any investment, there will be peaks and troughs. Platform transparency and investor education will help ensure both sides can work together effectively in mitigating these risks as much as possible.

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????????????????????????????? JOINT VENTURE

Combating volatility in volatile times Volatility has plagued the UK’s investment markets, but Luke Madden, managing director of Wellesley, tells us how his firm is fighting back

T’S NO SECRET THAT Brexit has weighed heavily on people’s investment portfolios. The FTSE 100 ended 2018 down 12.5 per cent – its biggest decline in a decade – amid continuing political uncertainty. Meanwhile, savings accounts and cash ISAs continue to offer extremely low interest rates. In order to earn inflationbeating returns, investors have to balance volatility, risk and reward and many have decided that fixed-income investments offer a happy medium. “One of the attractions of fixedincome investments is that they offer greater protection relative to equities and currencies because on the whole the returns are less volatile as the interest component is fixed in advance,” explains Luke Madden, managing director of Wellesley. “Consumers for many years now have been frustrated by the low interest rates offered by the banks and they're looking for something more interesting.” In terms of volatility there is a wide range. Cash savings are right at the bottom of the scale thanks to their Financial Services Compensation Scheme (FSCS) protection, while high-risk, highreward equities are at the top end of the scale. According to Madden, alternative finance investments fall somewhere in the middle of the volatility scale, although he is careful to point out that there

are “different shades” of risk in alternative investments as well. “You have a peer-to-peer investment which is typically sold on a target return basis so there is an element of volatility, albeit with a higher return than FSCSprotected products,” says Madden. “Then you have fixed-interest bonds which also benefit from a higher return than FSCS-protected products but have a lower element of volatility given the fixed interest rate element.” Over the past few years, Wellesley has pivoted away from P2P lending to focus solely on fully regulated listed bonds. This is a move that was “very much driven by our customers,” Madden says. “They really like fixed terms, fixed rates and the benefits of

holding their investments in an ISA wrapper.” In order to deliver the returns that its customers expect, Wellesley has taken a pro-active approach to its loan portfolio. “First and foremost we look at the underlying fundamentals of the market and while Brexit can affect those fundamentals, we believe there is a very strong demand for real houses for real people at a sensible price,” says Madden. “We believe the most liquid and lowest risk part of the market is reasonably priced unit values, relative to the local market, so that’s what we are concentrating on.” Despite Brexit uncertainty, Madden is confident that Wellesley can counter any short-term volatility without compromising on the quality of its loan portfolio. In fact, Madden says investor demand is “very strong” and getting stronger. “If you look beyond Brexit and back to the fundamentals of what is happening in the economy there is still not enough supply to meet demand,” says Madden. “There is still a lack of quality UK housing and the government is still not meeting its own housing targets. “In order to meet those targets you have to build houses and there is a raft of high-quality developers who are looking for funding from a trusted partner like Wellesley.” With Brexit uncertainty destined to continue well into the second half of the year, this will be welcome news to investors everywhere.

PROFILE

David and Goliath David Bradley-Ward isn’t content with just developing his own P2P platform, he’s now set on transforming the market with new technology. He tells Andrew Saunders about his plans for a global P2P ecosystem

AVING SPENT FOUR years as an RAF engineer in a previous life, David Bradley-Ward is no stranger to the potential of superior technology when it comes to delivering greater firepower. Now as chief executive of Ablrate he is busy developing some superior technological firepower of his own, and he has Big Finance squarely in the crosshairs. “Finance is a pyramid – the money accumulates at the top even though average guys like you and I are where it all comes from in the first place, from our pension funds and investments,” Bradley-Ward asserts. “All the different layers of finance, they just clip us until we end up making nothing out of it. “My idea has always been to flatten the landscape, and with the technology we have now with blockchain coming in, and with the regulatory environment, peerto-peer is just perfect for that,” he says. “Our goal is to put more of the return into the hands of the people whose money it is rather than the people who are in the middle of it all.” Asset-backed P2P lending platform Ablrate is the medium he is using to achieve that goal, and it’s going pretty well so far – annual turnover is growing at 150 per cent and the business has funded £44m of loans since getting off the ground in 2015.

That’s not to say that there hasn’t been a bit of turbulence en route however. Having started out with aircraft financing through some of his old contacts in the aviation business, Bradley-Ward quickly broadened the business’s scope to include providing capital equipment and working finance more widely. “We were a little bit overconfident – in the aircraft market you need £1m or £2m per deal at least,” he explains. “We

and waste management factories – generally they are things that are a bit off the beaten track. We’re currently looking at well-known events venue, for example, securing a loan for a million quid against the lease. The sorts of things that you perhaps wouldn’t just walk into a bank and try to explain to them.” As well as specialising in lending against what you might call nonstandard assets, Ablrate has also made its mark through efforts to tackle one of the P2P business model’s abiding problems – that it’s much easier for investors to get into a loan than it can be for them to get out again in a hurry if they need to. Put simply, P2P investors can’t trade their loans anything like as readily as equity investors can trade shares on a stock exchange, and the risk of being caught out by this lack of liquidity deters many smaller investors who might otherwise jump at the chance to access P2P

“ We can’t all be Funding Circle, but

50 platforms operating together can be Funding Circle

realised that was not going to happen so we quickly pivoted to anything that was asset backed. “We’ve done anything from removal crates to business jets

”

returns. Although many of the larger platforms do have secondary markets where existing loans can be bought and sold, activity levels vary considerably. Smaller platforms

PROFILE

can struggle with the scale required for secondary markets due to their smaller pools of loans and investors. Ablrate’s secondary market is exceptionally active especially given the firm’s fairly short history and modest size – no less than £33m of the total lending to date of £44m has been traded on its secondary market so far. “Most platforms don’t have a very good secondary market – they are clunky and often not really a market at all,” Bradley-Ward says. “But ours is hugely liquid, it allows platforms and investors to rebalance their portfolios.” So when events such as the Brexit

vote, for example, result in some investors wanting to exit some of their loans, they can – so long as there are others ready to take them on. “Those who are risk averse have been able to take their money out, while those who are prepared to take a little more risk have come in,” Bradley-Ward adds. Its success sparked Bradley-Ward’s big idea to take on not only the incumbents of big finance, but also to help smaller P2P platforms cooperate in the face of increasingly asymmetric competition from the big three in the market – Funding Circle, Zopa and RateSetter.

In partnership with tech provider ASMX, Bradley-Ward is developing a blockchain-powered secondary market system aimed at providing platforms with more liquidity, thus widening the appeal of P2P to both smaller investors and institutional money. “If you’re only doing a million a month, you’re not going to get any institutional money simply because you are not doing enough,” he asserts. “We can’t all be Funding Circle, but 50 platforms operating together can be Funding Circle. That’s why we want ASMX to be that central cog.” Ablrate and its partner business

PROFILE

Huddle Capital will be the first to offer the ASMX platform, but his vision in the longer term is to establish an ‘ecosystem’ of partners, operating globally, whose investors can all trade in each other’s loans simply, efficiently and – crucially – at a low enough cost to make it worthwhile. “We’ve already licensed the tech out to an Australian-regulated firm, the idea being that someone in the UK can buy a loan that was originated in Australia, and viceversa,” he explains. “Any traditional settlement of that would just be tremendously expensive. But with ASMX the trading friction which traditionally stops people buying and selling in small quantities is going to be massively reduced by the technology.” It’s a thrifty and collaborative and approach which characterises his approach to business in general. Unlike many platforms, Ablrate, he points out, is a profitable business that in its first four years has generated £4.76 in returns for every pound staked by its initial shareholders – a record that many larger and more established platforms would struggle to match. He’s also a keen advocate of greater transparency when it comes to the risk/reward equation in P2P – and he has some concerns that the regulatory environment could be about to take a wrong turn over the so-called ‘sophisticated investor’ requirements outlined by the Financial Conduct Authority last year. The City watchdog has suggested the restriction of platforms’

marketing activities to those who are certified as sophisticated or high-net-worth investors or those that certify that they will not invest more than 10 per cent of their net portfolio in P2P. Just what is a sophisticated investor, and can people be relied upon to self-certify themselves as one? “I call it the Uncle Bob

problem – if I put a button on the website saying ‘Is your Uncle called Bob?’ people will tick it anyway just because they want to open an account,” he says. Without a stronger definition of what constitutes a sophisticated investor it could be very tricky for platforms if anything did go wrong down the line, he adds.

“ Finance is a pyramid – the money accumulates at the top even though average guys like you and I are where it all comes from in the first place ”

PROFILE

that those predicting economic doom and disaster are going to be disappointed. “It’s a bit like the Millennium Bug,” he says, referring to the widespread belief at the turn of the last century that six-digit date fields embedded in old-school global computer systems wouldn’t be able to tell the difference between 1 January 2000 and 1 January 1900. “The world was going to end, hospitals were going to shut down and aeroplanes were going to fall out of the sky,” he says. But in the end these fears proved entirely wide of the mark. “I woke up

“ Most platforms

don’t have a very good secondary market

”

“The requirements are that you take reasonable steps, but what are those reasonable steps? If they [the regulator] didn’t like the cut of your jib they could use that to beat you to death.” He also fears that any resulting increase in the regulatory burden will stifle competition in P2P by favouring large platforms with deep pockets over smaller but potentially more innovative ones. His preferred solution? An industry standard definition of a sophisticated investor, provided by the credit ratings

agencies, that can be easily added to any platform’s existing systems. “We already have a score that investors have to meet for KYC and AML,” Bradley-Ward comments. “Why not have something on top that becomes a standard for all? Then small platforms wouldn’t have to spend a fortune that they can’t afford.” As for the likely impact of Brexit over the coming months – if and when it finally happens – on both the sector and on UK business more widely, he believes

on 1 January 2000 with a hangover, and nothing had happened. Something similar will happen with Brexit – there is so much money associated with things basically staying the way that they are now. Ways round it will be found.” Whatever political changes may or may not arise in 2019, BradleyWard’s focus remains on piloting Ablrate through the next phase of its growth. “If we can spearhead that ecosystem of 50 platforms working together around the world through ASMX, then I think we can really do something spectacular,” he says. And everything the business and its partners achieve will continue to be done in the name of the little guy rather than the big guns, he concludes. “I like doing it on that basis, because it will give more power to the individual lenders than trying to create some institutional behemoth ever could.”

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JOINT VENTURE

Prime numbers

The value of Prime Central London property has taken a hit amid the uncertainty of Brexit. Narinder Khattoare, chief executive of Kuflink, explains how his platform’s investors have no cause for alarm

REXIT HAS BROUGHT uncertainty to almost every area of the UK economy, but few places have received as much attention as the Prime Central London property market. According to recent data from Lon Res, property prices in the most sought-after parts of the capital fell by 5.7 per cent year-on-year in the final quarter of 2018. Luckily, Kuflink investors can feel reassured that the peer-to-peer platform has limited exposure to Prime Central London property. As well as using experienced property valuers, Kuflink steers away from ultra-high-value London-based property. Once the valuers have submitted their reports, each and every property is examined by Kuflink’s in-house underwriting team, senior underwriters and credit committees. This credit process was set

“We're just human beings, we listen to what other people are saying and everyone is saying to stay away from London because you could lose a lot of money very quickly,” he says. “But a slight

in place long before Brexit, but Narinder Khattoare, chief executive of Kuflink, is aware that many of the platform’s investors are especially wary of Prime Central London prices at the moment, due to the ongoing uncertainty of Brexit and an abundance of scare stories from the media.

increase in value can go in your favour as well.” Khattoare is still confident about opportunities in the broader London property market, particularly when stepping out of Prime Central areas. “The London market experienced a correction a few

“ It’s down to the individual circumstances of the borrower ”

years ago, so the only fear is whether prices are going to drop further. I don't personally think so,” he says. “London has always been more of a safe haven – yes, it gets knocked down but it bounces back faster than some other cities, because it has the infrastructure, the jobs and the demand from buyers.” Kuflink is addressing the Brexit-based risks in the best way that it can: by maintaining a diversified portfolio and a strict due diligence process. “We'll lend to London, Manchester, Birmingham, etc, but it's not just ultimately down to the location,” Khattoare says. “It’s down to the individual circumstances of the borrower.” Again, Brexit can play a significant role in this part of the lending process. Economic and political uncertainty is keeping the UK property market in a holding pattern as investors and borrowers adopt a ‘wait and see’ approach. However, Khattoare believes that “money is sitting there waiting to see what happens post Brexit, and the chances are that once we’ve made a decision on Brexit, people are going to start moving again.” In the meantime, investors can take reassurance in Kuflink’s measured approach and strong track record which is already proving its worth in testing times.