Landbay Review: Platform Health
Landbay recently closed a £1.25 million funding round on the equity crowdfunding platform Seedrs. It follows a long history of the buy-to-let mortgage lender raising funds from the crowd. The platform is likely to have benefited from not only raising funds but also gaining a loyal fanbase to build their brand.
Why does this matter for people lending through the Landbay platform, either directly or through the Orca portfolio? Simply put, the financial stability of the P2P platforms is critical for lenders to ensure stable repayments of capital and interest. This is a core area of Orca’s due diligence focus. The importance of the stability of platforms was brought to light in February of this year when Collateral was forced to close due to a regulatory oversight. The intention of this blog is to provide an overview of the stability of Landbay as a platform to lend through.
Landbay Key Information
Landbay is a peer to peer (P2P) mortgage lender, raising funds on its online platform and lending them out to borrowers in the form of residential mortgages. The purpose of the mortgages is to purchase or refinance Buy-To-Let properties, predominantly by experienced landlord. This is a unique borrower segment in the UK peer to peer lending market.
Table 1: Landbay Key Information
|Company Name||Landbay Partners Limited|
|Launched||April 2014 (incorporated August 2013)|
|FCA Permission||Authorised and regulated by the FCA. Full permissions gained December 2016.|
|Telephone||+44 (0)203 817 7700|
|Address||7th Floor, 60 Buckingham Palace Road London SW1W0AH|
Revenue is generated from fees at the loan inception and during the lifetime of the loan. The buy-to-let mortgage market generally has lower lender/ borrower rates than other property lending markets such as development or bridging finance. This lower rate environment could result in a lower margin for Landbay.
Table 2: Landbay Financial Summary (Source: Annual Accounts, period ending December 2016)
Critical to Landbay is growing the loan book, both by originating more borrowers and by sourcing more capital. Since December 2016, the platform has grown rapidly, increasing lending to £120 million cumulative lending; £71.2 million of which has occurred during this period. The annual accounts, submitted at the end of December will reflect this growth.
26% of lending to date has been sourced from institutions with retail investors taking the bulk of the opportunities. In the annual accounts ending in December 2016, the P2P platform has reported to have 2,907 registered users, up from ,1961 at the end of 2015. In the latest Seerds campaign the platform reported to have 6,300 registered users; an increase potentially influenced by the launch of their IFISA in February 2017.
Although the company is operating at a loss, it has proven to be very successful at raising funds and has effectively utilised the equity crowdfunding platform, Seedrs. In total, £11.6 million has been raised from a combination of the crowd and professional investors including Zoopla and Omni Partners. Landbay has employed an interesting strategy on Seerds, often raising smaller amounts with up to 10 raises listed on the platform over a 4-year period. In contrast, other P2P platforms have raised large sums from big venture capitalist, typically every 18 months which leads the companies to either be in a state of spend or not.
The pre-money valuation of Landbay has increased from £616,667 in December 2013 to £28,918,587 in March 2018.
Landbay Key People
Landbay was founded by John Goodall and Gary Stern in 2013 with the platform’s first loan originated in July 2014.
Table 3: Landbay Key People
|John Goodall||CEO & Co-founder||John started his career with a major recruitment consultancy and subsequently co-founded a leading international financial services executive search business. He attained an MBA from Imperial College London, before returning to the City to work in an equity brokerage.|
|Gray Stern||Co-founder & Non-exec Director||Gray holds a non-executive Director position at Landbay focusing on commercial activities. Prior to Landbay Gary worked 20 years as a corporate property finance analyst, before establishing his own consultancy focused on debt/equity fundraising for offshore investors.|
|Julian Cork||COO||Julian is responsible for business development, technology, regulation and governance at Landbay. Prior to Landbay he held senior roles in Technology and business at JP Morgan and McQuarrie.|
|Tony Ward||Chairman||Tony is an acknowledged expert in mortgages, risk management and funding solutions. He is a Fellow of both the Association of Corporate Treasurers and the Royal Society of Arts and is a Member of the Institute of Credit Management. He is also a past Deputy Chairman of the Council of Mortgage Lenders and Chairman of Intermediary Mortgage Lenders Association.|
Although the company is operating at a loss, lending has increased significantly in the past 18 months to £120 million, cumulative lending. The team has further proven effective at raising equity finance to scale the Landbay business. The growth of the platform has been consistent and as the type of lending is fairly unique in comparison to other P2P platforms we believe Landbay is a good option to diversify a P2P portfolio.