The Award Winning Billion Pound Lender – Accredited to Lend Under Government Guaranteed CBILS Scheme
Business overview
| Location | Manchester, United Kingdom |
|---|---|
| Social media | |
| Website | www.assetzcapital.co.uk |
| Sectors | Finance & Payments Mixed Digital/Non-Digital Mixed B2B/B2C |
| Company number | 8007191 |
| Incorporation date | 27 Mar 2012 |
Investment summary
Business highlights
- £1bn+ lent, £120m interest, 1 in 100 homes funded, 120 staff
- Secured business lender - commercial mortgages/house building
- Over £100m of new funding lines agreed in just the last few weeks
- Applying for Future Fund, not conditional - see Key Info
Learn more about convertible loan campaigns.
Idea
Introduction
Assetz Capital is the leading property-secured business marketplace lender in the UK and Europe. We have provided over £1 billion of loans to SMEs and property developers in the UK, financed by retail investors and increasing numbers of institutional investors, government bodies and banks.
We believe that with our scale and our 120 staff, we have achieved critical mass and have proven our business model - having been profitable in the 17/18 financial year, and with EBITDA minus exceptional funding costs positive in 18/19 and 19/20*.
We are now accredited to distribute CBILS government guaranteed loans. We believe that this is truly a pivotal moment for Assetz Capital, and we have the potential to grow significantly in coming years and to continue to pull away from the rest of the pack in the sector.
We have been recognised twice in the last two years as one of the UK’s top 100 fastest growing technology companies in the Tech Track 100 and we believe our future looks bright.
Assetz Capital is authorised and regulated by the FCA.
*19/20 figures are based on unaudited management accounts.
Substantial accomplishments to date
Since commencing lending in April 2013, Assetz Capital has proven its position as a leading brand in the alternative business lending market and as a leading online investment marketplace for secured business loan investments:
- We are the leading property-secured business marketplace lender in the UK and Europe, and the second largest business marketplace lender in the UK and Europe - behind only Funding Circle
- We have arranged loans of over £1 billion since commencing in April 2013
- We are now CBILS accredited to lend under the government loan guarantee scheme
- We already have over £100m of CBILS funding investment confirmed, with much more in discussion
- We have been ranked 53rd out of the UK’s top 100 fastest-growing technology companies in two consecutive years in the Sunday Times Tech Track 100, with 78% average revenue growth per annum for the three financial years to March 2018, as well as featured in the FT1000, Europe’s fastest growing companies
- Our investors have earned around £120m of gross interest before tax
- Funding is now well diversified with numbers of institutions such as banks, government, credit funds and investment managers accelerating strongly
- Critical mass has been achieved and revenues of £17m in the last audited financial year and further growth expected in the 19/20 year
- Our IFISA now has over 5,000 investors and over £100m invested
- We funded the equivalent of 1 in 100 English homes in the last two years.
Monetisation strategy
We charge our business borrowers an arrangement fee of typically 2-5% of the loan inclusive of any introducer commission that we pay and we also charge the borrower a loan monitoring and servicing fee (typically 0.9-2% pa). Loan arrangement fees and servicing fees are paid by the government on behalf of the borrower for the first year of CBILS loans.
Even now, in the pandemic, we have been managing our costs prudently and introduced new income streams to compensate for a temporary pause in new lending as we prepare for CBILS lending. This is principally due to the fee income from the £400m loan book.
As we attract more and more capital from investors and build our track record and loan book performance data we expect our cost of capital (the interest rate required by investors) to continue to lower, potentially both improving our margins and also tightening the rates at which we can potentially fund, making us both more competitive and profitable.
Use of proceeds
Having recently closed our third Seedrs Equity round we are well funded but have new opportunities under CBILS for growing and strengthening the business. This round is intended to be alongside the government’s new Future Fund.
This funding round is to help support the next substantial phase of our growth, and will be utilised for the following projects:
- Help fund legal and structuring work around CBILS and the new institutions for that and also support growth in future lending
- Working capital to support the enlarged company scale
- Continuing to substantially grow the team size from the current 120 staff
- Help provide some 'skin in the game' in the lending as required by CBILS
- Provide a further opportunity for our shareholders and customers to participate in supporting the business’s continued success.
An IPO continues to be evaluated as a future step.
Key Information
Future Fund Information
Seedrs is supporting companies who are intending to apply to the Government backed Future Fund. You can read more about the Future Fund here: https://www.seedrs.com/learn/blog/the-future-fu...
In order for a company to be eligible to seek matched funding from the Future Fund, this investment round must be on the convertible loan terms that have been prescribed by the Future Fund for this purpose. These terms differ to our normal ‘advanced subscription agreements’.
Given this product differs from most campaigns on Seedrs, we urge all investors, including regular Seedrs investors, to read the information below and ensure you understand the terms in full before making your investment.
1. Key terms
You will see a term sheet attached to this Campaign in the Documents section which sets out the key terms of the convertible loan and you can see the full document prescribed by the Future Fund here: https://www.british-business-bank.co.uk/ourpart...
A summary of the key terms is set out below, but should be read in conjunction with the term sheet:
Discount: 20%
Interest: 8% per annum, non-compounding. On conversion events, the company can choose to repay the interest or convert it to equity (generally without the discount). See the Term Sheet for more details.
Redemption Premium: An amount equal to 100% of the principal loan amount.
Valuation Cap: £120,000,000.00
Qualifying Equity Financing. The convertible loan will automatically convert on an equity financing raising at least the total loan amount, at the lowest share price of equity financing less the Discount.
Maturity Date: 36 months from signing convertible loan agreement.
The default position is on the maturity date is that the loan will convert to equity unless the investor majority elect to redeem.
If redeemed, the company will repay the principal together with the Redemption Premium.
If converted, the conversion price will be at the most recent funding round share price less the Discount, provided that funding round happened after 20 April 2020 and was at least a quarter of the size of the convertible loan investment. If no such funding round has occurred, conversion will be at the share price of the last funding round prior to 20 April 2020 (no Discount).
Other events of default or conversion: There are various other scenarios in which the convertible loan may convert or be repaid and investors should reference the term sheet:
Non Qualifying Funding Round: The convertible loan can convert on an equity financing round which does not meet the size criteria of a ‘Qualifying Equity Financing”, at the election of the majority of investors under the loan. Please see the term sheet for how this conversion is priced.
Exit: The convertible loan will automatically convert or be redeemed on an Exit, whichever would give investors the higher cash return. Please see the term sheet for how conversion is priced and payments on redemption in this scenario.
Events of Default: The convertible loan is to be repaid on the events of default, such as liquidation or winding up. See the term sheet for more details.
2. Government matched funding
The company intends to apply to the Future Fund for matched funding on the total eligible amount invested in this funding round. The Future Fund will “match” the funding raised via Seedrs or other eligible sources, subject to a minimum investment of £125,000 and a maximum investment of £5m. The Future Fund is to be allocated on a ‘first come, first served basis’, so there is no guarantee that a company will receive the Future Fund matched funding.
This campaign is not conditional upon receiving matched funding from the Future Fund. Seedrs will complete the investment and transfer the funds raised even if the application for Future Fund investment is rejected. We will ensure an application is made to the Future Fund for matched funding and will not complete until we know the outcome of the application. But if the application is rejected, the company will still be permitted to complete the investment round.
Seedrs does not charge any fees in relation to the Future Fund matched funding, application process or for acting as lead investor with respect to applications.
3. Conversion to equity
The convertible loan agreement prescribed by the Future Fund is equity focused and favours conversion of the loan to equity as the default position.
Redemption is only available in certain scenarios and is often subject to the vote of majority of the investors. Where a vote of investors is required, Seedrs will vote on behalf of any investors it represents as nominee.
There is a possibility that the convertible loan will convert in some scenarios without the consent of Seedrs (if we do not make up a majority of investors). It is also Seedrs’ position that this is primarily an instrument for investing in the equity of the fundraising business and our default position would be to vote in favour of converting the loans to shares in the company, unless there is a clear or compelling reason not to.
4. Risks
As always, investors should be aware of and accept the risks involved in investing in early stage and growth focused businesses: https://www.seedrs.com/pages/risk-warnings
In addition to the usual risk warnings included above, investors should be aware of and accept the following with respect to convertible loans:
The convertible loan agreement is intended as bridge funding to a future funding round, but there is no guarantee that a company will be able to secure further funding.
The Future Fund is to be allocated on a ‘first come, first served basis’ and there is no guarantee that a company will be successful in its application to receive the Future Fund matched funding.
There is a risk that the Company may not have sufficient funds to repay the loan on the maturity date, pay interest when it becomes due or pay the redemption premium included in the terms.
Convertible loans are unsecured obligations and in the event of a winding up or liquidation event will rank behind secured creditors of the Company.
5. Secondary market
Investors will not be able to sell their interest in the convertible loans on the Seedrs Secondary Market unless and until they have converted to shares in the company (and then only subject to eligibility and the terms and conditions of the Seedrs Secondary Market).
6. EIS Relief - past, current and future
As noted above, the convertible loan instrument is not compatible with EIS requirements, so no EIS applications will be made with respect to investments in the convertible loan.
The government has confirmed that investing in the convertible loan will not impact EIS relief previously claimed on investments in the fundraising company:
“The government has confirmed that such previous investments will not be affected where the convertible loan converts into shares. Where the convertible loan note redeems, we have been alerted that the government intends to make changes to the rules to clarify that this is compatible with such previous investments.”
However, investing in a convertible loan could impact your ability to claim EIS relief on future investments into the same company. The government has not clarified the position on this and has said it is a matter for HM Treasury and HMRC.
Seedrs is unable to provide tax advice. Tax treatment depends on individual circumstances and is subject to change.
Debt
Please note, where the amount due to a creditor is over £5k, the company has circa £900k due in aggregate to such creditors.
Investor funds will not be used to repay any debt.
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