Goldman Sachs and personal loan startup Lendable from the U.K. have reached a £200m deal, in a sign of Goldman’s confidence in the startup, according to a report by the Financial Times.
Goldman Sachs Private Capital will buy Lendable loans and expand the bank’s presence in the region, despite the ongoing specter of Brexit. Lendable is about five years old and uses machine learning technology to automate the process of underwriting and offering personal loans. The company works on behalf of institutional investors and doesn’t keep the loans on its own balance sheets.
Investors get the interest payments and Lendable charges a service fee for platform use. The company recently received £500m in funding from Waterfall Asset Management, Varadero European Special Opportunities and NatWest Markets last month. A specialty lender called Castle Trust invested £300m in 2017.
According to Lendable Chief Capital Officer Rory McHugh, institutional investors have committed right under £1 billion in eight separate transactions over the last year.
“The recent funding partnerships show investors backing Lendable’s platform and approach to U.K. consumer credit. Investors are not taking on two-month transactions but taking a much longer-term view on the relationship and wider macro credit backdrop,” he said.
Loans average around £5,000 and average interest runs in the mid teens. Repayment typically lasts about 43 months, McHugh said. The company offers loans as big as £20,000 with an interest rate of between 7.5 and 49.9 percent.
Last year, over £6 billion was loaned out to small businesses, property developers and consumers by peer-to-peer lenders in the United Kingdom. That was a 20 percent increase from 2017, according to specialist publication AltFi. P2P loans are expected to reach £7.3 billion this year. Lendable has given out over £650 million in loans to customers in the U.K. so far, and it has about £400m in outstanding loans. It thinks it will give out £500 million this year.