(LONDON) The continued growth of the sector and the unique investment opportunities in the marketplace lending industry are the main reasons why three key industry leaders are partnering to form LendTech Capital Partners ("LendTech"), a new investment advisor focused on private equity strategies within the marketplace lending industry.
LendTech has been established pursuant to a joint venture between affiliates of Liberum, a London based investment bank who conceived Europe's first institutional investor in marketplace loans in 2013 and has raised over $1.9B for marketplace lending funds and platforms; Ranger Alternative Management II, LP, an investment advisor which manages two leading direct lending funds, The Ranger Specialty Income Fund and the Ranger Direct Lending Fund, the latter which is publicly traded on the main market of the London Stock Exchange (ticker: RDL) and Velocity Venture Group, whose members have led over $3B in strategic investments, acquisitions, and recapitalizations in the payments, transaction services, and banking industries.
LendTech is in a unique position to leverage the three affiliate partners' industry experience and access to deal flow to take advantage of one of the fastest growth Fintech sectors, Marketplace Lending.
Marketplace Lending is in a critical growth phase with the continued international disruption of bank lending, the expansion into multiple lending sectors and major financial institutions now entering the space.
In the five years to 2015, the annual volumes of the leading 8 US & UK platforms have increased by a factor of 100x, reaching $23B of loan origination in 2015. LendTech's unique expertise and insight into the Fintech sector strongly positions the strategy to make strategic investments in well-positioned Lending platforms and in the services and technology providers surrounding them.
"We strongly believe in the advantages that Marketplace Lending offers over traditional bank lending," states Cormac Leech, a director in Liberum Alternative Finance. "With their cost effective models, more friendly borrower experience and their ability to pull large amounts of borrower data quickly, Marketplace Lenders are the future of the financial industry."
LendTech's private equity strategy seeks to make Seed, Series A, and follow on investments and will focus on not just marketplace lending platforms, but also complimentary businesses in industries such as technology, media and marketing.
"The partners behind LendTech provide a tremendous advantage by enabling us to leverage well timed investments in businesses poised for rapid growth," states Andrew Rueff, a partner at Velocity Venture Group. "We are focusing investments on strategic companies that have clearly defined competitive advantages coupled with strong management teams."
"Because we have a deep understanding of the industry and how marketplace lending platform valuations are tied closely to their originations, it gives us a competitive advantage," states Bill Kassul, a principal in Ranger Alternatives Management II, LP. "In the past year, all three of LendTech's affiliate partners have been approached by private equity investors who wanted to leverage our exclusive insight into deal flow. This new fund will allow them to do this".
For more information about the LendTech Capital strategy, please contact Bryan Chambers at +1 214-207-4080 or email@example.com.
About Ranger Alternative Management
The Ranger Specialty Income and the Ranger Direct Lending strategies are advised by Ranger Alternative Management II, LP. Ranger Alternative Management is an affiliate of Ranger Capital Group a holding company which controls a variety of registered investment advisers offering traditional and alternative investment opportunities to institutional and high net worth individual investors. Additional information regarding Ranger Capital Group and its affiliated investment advisers may be obtained on-line at www.rangercap.com.
Liberum is an investment banking group with offices in London and New York, started in 2007. It focuses on raising capital for UK and international businesses, totaling over $20 billion to date, and providing investment ideas and research to institutional investors. Liberum has a dedicated Alternative Finance team that has relationships with leading and emerging online lending platforms and funding providers globally. The team selectively combines making venture capital investments with being a development partner for platforms, leveraging Liberum's ability to source lending and equity capital in the sector – over $1.9 billion to date.
About Velocity Venture Group
Velocity is a Fintech advisory firm located in Dallas, Texas. Velocity partners with selected businesses to manage comprehensive capitalization and growth strategies. Velocity members have led over $3 billion in strategic investments, acquisitions, and recapitalizations in the payments, transaction services, and banking industries. The partners at Velocity have experience making venture capital investments, managing high growth technology businesses, and leading them through to successful exits.
(LONDON) Liberum, the independently-owned pan European investment bank, has developed new electronic trading functionality called LIBPLUS that means professional clients can execute equity flow in multiple dark venues simultaneously, automatically and with one click.
For a quick overview, play the one-minute video below.
Liberum has acted ahead of the advent in 2018 of a revised Markets in Financial Instruments Directive, or MiFID II, which will make it imperative that dark venues are selected fairly and intelligently.
LIBPLUS means that dark order flow can now visit 34 venues in an instant, boosting the chances of executing blocks of stocks whilst minimising signalling.
“In our view, the analysis of what constitutes best execution trade-by-trade is set to become more intensive and granular and LIBPLUS helps meet that challenge,” said Dominic Lowres, Liberum’s Head of Large Cap Cash Trading.
“MiFID II may result in some venues withering whilst others flourish,” he added.
“LIBPLUS will visit venues democratically where liquidity is meaningful. This removes the need to constantly reassess venues daily,” he said.
LIBPLUS is Liberum’s new Smart Order Router that delivers a high spread capture of 53% on average - higher than Liberum’s peer group - according to market data analytics from Fidessa.
A spread capture value is the price compared with the bid-offer spread. As an example, 50% means a mid-point match.
As Liberum developed LIBPLUS it found that many clients were restricting Minimum Fill Sizes so as to avoid tiny and implicitly costly fills on big ticket trades.
LIBPLUS answers this. It passports a client order to 20 dark venues with normal minimum fill sizes whilst simultaneously revisiting 14 of these with a much larger minimum fill size of around US$50,000.
Dark venues are off-exchange trading destinations where institutional investors can trade blocks of securities.
LIBPLUS is not a retail product and Liberum is unable to respond to enquiries from retail investors. Professional clients only can contact Dominic Lowres, Liberum’s Head of Large Cap Cash Trading on +44 (0) 20 3100 2103 or by email at firstname.lastname@example.org
Media inquiries: Redleaf Polhill
Call: +44 (0)20 7382 4747
Liberum is a pan-European investment bank. Its core activities are research, sales and trading in large, small & mid cap pan-European equities, as well as investment banking and advisory services including IPOs, secondary issues and mergers and acquisitions.
(This column is a summary of a detailed 24-pg strategy note published this week that includes stock recommendations intended for professional investors.)
By Sebastian Jory, Liberum’s Strategy & Stock Selection Analyst
(LONDON) - The troubled performance of credit and equity markets in the last six months suggests the chance of an imminent UK recession has risen. We’re not calling it yet but it pays to know what happened in the last financial crisis to avoid missteps.
We studied the FTSE 350 earnings-per-share and stock price trends seen during 2008/2009. The comparisons are imperfect but there are three key points.
DEFENDING THE DEFENSIBLES
First, it’s striking how during the last financial crisis share prices in defensive sectors such as healthcare, consumer staples and support services far overshot what subsequently proved to be small earnings downgrades.
Yes, this can be justified by higher risk premia across all equities but it arguably represents a mispricing given that the risk of long-term capital loss is ostensibly lower. Defensives were the best through-cycle performers (2007-12) and also began rallying off the lows first. We think their performance this time round will be more robust.
Today, current multiples relative to the ’08-09 crisis suggests three sectors that stand out for cheap access to structural growth – aerospace and defence, support services and healthcare.
Next come what we call the ‘ultra-cyclical’ stocks – housebuilders, real estate, banks and financial firms. Downgrades now among these sectors would lift the probability of a recession sharply. Ultra-cyclicals that were downgraded first in ’08-09 were also downgraded the hardest.
There are clear idiosyncrasies about the last cycle, most notably that financial leverage across the market was higher, particularly at the ultra-cyclicals.
That said, the market now appears to us much further ahead of the fundamentals than in 2008. Back then, when the FTSE 250 was down 15% from its peak we had begun to see real earnings downgrades at the ultra-cyclicals.
Currently, there is scant real world confirmation that justifies such a sell-off. Either you believe the market is a better discounter now than it was eight years ago or you conclude the market is simply a touch oversold.
IT FEELS CHEAP BUT...
Value stocks – those which trade on the cheapest multiples - have underperformed their quality counterparts by 28% since mid-2014. Should we start buying them?
Only if you think the market is wrong on the economy. Our analysis shows this underperformance doesn’t get close to reflecting a recessionary scenario. The divide between value and quality could widen a further 50% before it looks stretched.
This will bring investors’ focus back on the balance sheet. As credit spreads rise we continue to prefer companies with cash. Whilst buying stocks purely on their dividend yield has worked well in the past five years or so, this approach underperforms in a recession.
We see our 'safe yield' picks – stocks where we see the dividend as less likely to be cut – as a better option, despite yields being optically lower.
Sebastian Jory leads Liberum’s Strategy & Stock Selection research coverage.
Professional investors only can contact Liberum’s research team by emailing email@example.com to know more. We regret we are unable to respond to retail investor queries.
Important disclaimer > here.
Media enquiries: Redleaf Polhill
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(LONDON) The annual 'bible' for the UK’s Small and Mid Cap equities market released today by Liberum concludes that it will see pockets of outperformance in 2016 led by companies with strong balance sheets or experiencing structural growth, as well as those who are dollar earners or that return cash to investors.
The UK’s Small and Mid Cap market, or SMID, comfortably outperformed the FTSE 100 in 2015 and now tops the Investment Association’s asset class return list on a five-year view.
Liberum’s UK SMID Annual, headlined “Late Cycle Opportunities”, shows that Small Cap remains at a discount but historical late-cycle underperformance of value stocks supports the bank’s conviction that there are opportunities in stocks exposed to structural growth.
It finds greater valuations for companies who have returned cash to investors and expect this to continue in the form of higher P/E multiples in 2016.
“UK SMID has regained its title as the best asset class in the world over five years,” said Joe Brent, Liberum’s Head of Research.
For 2016, “we think strong balance sheets are key,” he added. “Sadly, companies that have invested have mostly been punished. Cash returners have performed well. We argue that regular buy-backs are better than specials, but only regular dividends generate a valuation uplift.”
The report says that there is plenty to worry about globally; China, emerging markets, commodity prices, monetary tightening, negative earnings momentum, high valuations and a tired-looking bull market.
In the UK specifically, Brexit could trigger political instability, a Scottish Independence vote, weakness in Sterling and GDP softness… but more likely the UK will remain one of the highest growth economies in the G7.
The research also explores:
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(LONDON) The US recession currently affecting the world’s equipment and machinery makers could prove surprisingly short-lived, exclusive data from the Capital Goods team at independent London-based investment bank Liberum suggests.
PLAY SHORT VIDEO BELOW
Liberum’s proprietary monthly Early Cycle Indicator is based on analysis of 20 years of data and it reveals that December 2015 was the second consecutive month when the ratio of U.S. new orders-to-inventories among the world’s metal bashers exceeded 1.10, the highest level since 2014.
“History shows that orders recover without exception when this happens,” said Daniel Cunliffe, Liberum’s European Capital Goods Analyst.
The data implies a return to order expansion within six months.
“We remain bearish on the sector as we expect deflation to continue,” Daniel added. Last year, Liberum’s ECI data underpinned a view that the sector would face a downturn commencing the second quarter of 2015. Institute for Supply Management data indicates that US manufacturing has been in recession since November 2015.
“We struggle to identify recovery drivers at this stage, but we cannot ignore the strength of the US data, which has led to an industrial order recovery on all seven occasions between 1985 and last year,” Daniel said.
The Indicator, created by Daniel, weights new orders from the Purchasing Managers Indices versus inventories in Europe (50% of the Index), the US (30%) and China (20%).
The ECI is 80% correlated with volume growth at giant global industrial firms and can offer a six-to-nine month lead on trends.
The early cycle refers to the critical period after a recession when companies buy smaller items such as ball bearings or drill bits for products sold, or projects delivered, in the near term. Late cycle refers to major capital expenditure such as factories and power plants that meet rising demand from the early circle.
Liberum is an independently-owned pan European investment bank. The firm’s core activities are research, sales and trading in large, small & mid cap pan-European equities, as well as investment banking and advisory services including IPOs, secondary issues and mergers and acquisitions.
Read an important disclaimer > here.
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The Renewables Infrastructure Group Ltd. (Ticker: TRIG LN) has today appointed Liberum as Joint Corporate Broker.
TRIG has invested in 36 distinct fully-operating renewable electricity generation assets in the UK, France and the Republic of Ireland. 24 of the assets are onshore wind projects and 12 are solar PV projects, representing aggregate generating capacity of approximately 658MW, with a weighted average operational history of approximately five years.
TRIG entered the FTSE 250 in December 2015.
Click >here for more information on the company.
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