Global alternative asset manager the Carlyle Group has invested $50 million in the first securitisation deal in Australia of unsecured, online business loans, which will allow Prospa to step up its small-business lending as the big banks overlook the sector.
The securitisation deal, which is only the third globally in the online business lending category, is part of a $60 million capital raising that was also supported by Ironbridge Capital, AirTree Ventures, and former Westpac executive David Fite. The deal was revealed by Street Talk online on Wednesday.
Prospa has lent $70 million to thousands of businesses over the past four years from its balance sheet and plans to increase this to $500 million over the next couple of years. Big banks are largely avoiding lending to SMEs without security because of concerns about managing the risks of unsecured loans.
Beau Bertoli, Prospa’s joint chief executive, said the fintech start-up, which employs 70 people in Sydney, conducted a global search to find the right investors, with deep knowledge of credit markets and deep pockets, to support Prospa’s loan growth of “many hundreds of percent year-on-year”.
“It became obvious that [Carlyle and Ironbridge] could work very closely together behind our business, and we could scale up our lending book very quickly off the back of that,” Mr Bertoli said.
“It gives us a very scalable capital model and as we continue to grow so quickly we have the capability to do lots of different things in relation to the securitisation facility. This deal also shows there is a global market appetite for this type of lending and we are confident that off the back of this some local institutions will start to put their toe in the water as well.”
In the US, online lenders CAN Capital and OnDeck have done similar securitisations, which have required an innovative capital structure to be created to deal with the high frequency of repayments.