Assetz Capital Review

By Jordan Stodart | On August 30th, 2016
Assetz capital investment review loanbook analysis orca money

Assetz Capital Review Statistics

(*statistics are correct at time of publication 30/08/16)

Estimated returns/rates

(gross and capped, per annum)

Quick Access:  3.75%

30-Day Access:  4.25%

Great British Business:  7%

Green Energy Income:  7%

Manual Loan Selection:  6.5-18%*

*Dependent on you selecting loans to invest in, with no automatic diversification and no coverage from the provision fund, which affects the rate of return.

Performance

Historic default rate: 9%

18 loans have defaulted from circa 200 loans completed since 2012, as noted on the Assetz Capital website (Assetz Capital do not actually publish their historic default rate, but we have determined it from the information provided). Nine of these loans have been recovered with no capital or interest losses. The remaining nine loans are in the process of being recovered. This is how we determined the historic default rate; an important statistic in the investor’ decision-making process.

Estimated default rate 2016: 5.75%

Assetz Capital calculates a 0.31% expected loss rate, meaning some investors may not have their money returned in 2016. Their projection assumes that of the loans that default in 2016 (6% expected) some will be irrecoverable – the likelihood is that the asset securing the loan will have dropped in value, meaning at the time of recovering the debt the asset sale will not be of sufficient value.

Liquidity

Total lent funds to-date: £135.8m

 Total lenders to-date:  14,438

Total borrowers to-date: 427

 

Assetz Capital Loans

Assetz Capital facilitates loans to UK SME businesses and property developers. Their sweet spot loans are in the region £50k – £5m over a term of 24 months – 5 years, depending on the loan type. They can facilitate bigger loans for longer periods, however.

Variety of business loans, including:

  • Commercial mortgages
  • Residential buy-to-let mortgages
  • Bridging
  • Development
  • Renewable energy
  • Secured SME
  • Property investor hunting licences

Loan value: £50k min – £7.5m+ max (on staged drawdown)

Loan term: 24 months – 20 years

As you’ll notice from the Account names you can invest in a specific bracket of borrowers, such as green energy development projects. Alternatively, you can manually select the type of loans you’d like to fund.

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Assetz Capital Security

Asset security

Assetz Capital takes security on all loans that are accepted onto the platform. The variety of security held are as follows:

  • 1st charge
  • 2nd charge
  • Senior/mezzanine/stretched
  • With presales
  • Property security
  • Other security

Different security for different borrower types. You can find more details about security here.

The max loan-to-value (LTV) of any loan is 75% of the asset securing the loan – preferred LTV is circa 65%. Again, details can be found in the Assetz Capital brochure by clicking the link above.

Provision fund

A popular risk mitigating feature among peer-to-peer lending platforms in the U.K, the Assetz Capital provision fund can be exercised at the Directors’ discretion.

Assetz Capital does not publish the amount held within the provision fund, nor does it declare the percentage level of the loanbook it covers, which is not as forthcoming as some other major platforms who display this information. Having said that, Assetz Capital has never had to utilize its provision fund. This should not preclude it from conveying this important information.

*The provision fund DOES NOT cover investors lending through the Manual Loan Investment Account, but does cover all other accounts.

Stress testing

Assetz Capital conducts stress tests on loans to ensure the security held will cover borrower defaults in stressed economic environments, this is why their loan-to-value tends to cover a 30% drop in the market, E.G:

£700,000 loan + £1,000,000 security held = 70% LTV

If rapid economic decline occurs and the property devalues by 30%, it will equate to the value of the loan. Should the borrower default, then the asset can be sold at 70% of its original value, i.e: £700,000 which covers the £700,000 loan, just…

These stress tests are important. They add a significant, additional level of security, and mean the provision fund should rarely have to be used if the tests are conducted properly.

Assetz Capital Company and Team

Founded in 2012 by Stuart Law, Assetz Capital abides by three key pillars:

1. Integrity: Lender’s (investors) money is held in a designated client money account, in accordance with FCA rules.

2. Security: Charges are taken on property and equipment with a view to these being turned into real cash should the worst happen.

3. Fairness: Good loans are sourced for lenders to invest in, resulting in higher returns earned on their money.

 

Stuart Law, Founder and CEO

Stuart is a serial entrepreneur and a highly experienced businessman having run his own businesses for 30 years. He is the CEO and founder of the Assetz group of companies, including Assetz SME Capital.

Assetz Capital has an accomplished board of five directors, including an ex-property banker, Chartered Accountant, and insolvency expert.

Assetz Capital Products & Returns

 Quick Access Account (QAA): 3.75% p.a

The QAA automatically diversifies your money across a range of secured business loans that have passed the strict Assetz Capital borrower criteria. The account has a targeted capped 3.75% a year (before taxes and losses). The account has been designed to allow you to transfer your money to your Cash Account, where you can then withdraw, assuming a new investor on the platform purchases the units (£ amount).

This account has a separate, discretionary provision fund to cover investors.

30-Day Access Account: 4.25% p.a

This account gives you a relatively short notice period to access your money early, should you require to. The higher rate of return reflects the slightly prolonged amount of time it’ll take to sell your loan parts (£ amount) to a new investor – compared to the QAA, for example.

30 days’ notice in normal market conditions is required to withdraw your cash, or to transfer to other Assetz Capital Accounts.

Great British Business Account: 7% p.a

This account lends to SME businesses in the UK. Your capital will be diversified across a variety of businesses for a variety of loan purposes, ensuring your money is spread appropriately and funds the growth of the UK economy.

Green Energy Income Account: 7% p.a

This income account is designed to give you exposure to a portfolio of renewable energy projects, such as on-shore wind farms.

Manual Loan Investment Account (MLIA): 6.5-18% p.a

The MLIA was established to allow more sophisticated investors to create their own portfolio of secured business loans. You can set targets for the respective loans you fund and read credit reports to ensure your own due diligence processes are satisfied.

There is no provision fund coverage for the MLIA, hence the highest gross return (before taxes and losses) on the Assetz Capital platform can be achieved.

Assetz Capital Innovative Finance ISA (IFISA)

Details of how the Innovative Finance ISA can give you high-yield returns while sheltering your returns from tax, can be found here: ‘Innovative Finance ISA 2016: where are we now?’.

Also check out our handy ‘IFISA Infographic’.

The Assetz Capital Innovative Finance ISA is waiting in the wings and should be available soon. You can invest in all Assetz Capital Investment Accounts through the tax-effiicient IFISA, once it arrives.

(*all info related to the Assetz Capital IFISA published is correct at the time of publication)

Assetz Capital Fee Structure

Assetz Capital investors are not charged for investing across the platform. A fee is taken from the borrower repayments only.

Risks Investing in Assetz Capital

It would be remiss of us at Orca Money to say there are no risks investing across Assetz Capital, of course there are. You could, fundamentally, lose all your money with no FSCS protection. This is concurrent with all peer-to-peer lending platforms due to the regulation of P2P lending as an industry.

Assetz Capital receive Defaqto 5-star rating!

Here a couple of key risks to be aware of when investing across Assetz Capital:

1. Disclosure of provision fund details

Assetz Capital does not publish its provision fund balance nor does it display the percentage of the live loanbook that the provision fund can cover. This is not in-keeping with the transparency demonstrated by other platforms and the peer-to-peer lending industry in general.

Assetz Capital has, however, demonstrated impressive recovery processes when a loan goes into default, as it has a 0% historic loss rate of money. The platform has had defaults, yes, but with the volume of borrowers being lent to across Assetz Capital there will expectedly be defaults. The asset security features, stress testing and yet-to-be-used provision fund provide layers of risk mitigation, which should instil confidence in even the most novice of peer-to-peer investors.

2. Manual Loan Investment Account (MLIA)

This account is dependent on you selecting your own loans, putting the onus on you, the investor, to accurately and appropriately diversify your portfolio in-line with your own risk profile. There is no coverage from the provision fund with this account, hence the higher rate of return for higher level of risk.

Conclusion

Now four years’ old, Assetz Capital has asserted itself as a leading business and property lender in the peer-to-peer lending UK market. With rapid growth in 2014 of 300% and almost 15,000 investors to-date, Assetz Capital does well to compete with the big boys in P2P lending. With robust and rigid borrower vetting and proficient recovery processes – 0% bad debt rate – Assetz Capital has proved its lending capabilities to the level of being awarded a Defaqto 5-star rating; no mean feat!

Assetz Capital has an investment account for everyone. If you require (almost) immediate access to your money, want to fund energy projects or manually select secure business loans, look no further than Assetz Capital. Always be aware of the risks, however.

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