our capabilities marketplace finance€¦ · 58% 14% 44% 9% 2 our capabilities - marketplace...

Our capabilities Marketplace Finance2015

58% 14%

44% 9%

2 OUR CAPABILITIES - MARKETPLACE FINANCE

THE UK MARKETPLACE FINANCE INDUSTRY HAS MORE THAN DOUBLED YEAR ON YEAR

£267million

From

2012

£666million

2013 2014 2015

£1.74billion

£4.4billion

and a projected

BY THE END OF 2014, IT IS EXPECTED THAT UK PEER TO PEER LENDERS WILL:

CHALLENGES LIE AHEAD FOR THE INDUSTRY;

of potential investors were unlikely to use a platform due to;

a lack of information on the viability of

borrowers

perception that money is

safer with a bank

concerns about risk

60%

AWARENESS OF ALTERNATIVE FINANCE

People who...

Are aware of it Have used it

Are familiar with it

Have used or tried to use it

SME FUNDING GAP OVER THE NEXT FIVE YEARS:

£84billion

£191billion

Provide over

£1billionworth of business finance

(2.4% of gross national lending to SMEs (based on Bank of England’s Trends in Lending, October 2014))

to over

7,000SMEs

SME’s who...

OUR CAPABILITIES - MARKETPLACE FINANCE 3

Introduction

2015 is set to be a year when the industry demonstrates it is coming of age; that it is able to handle the fast pace of growth, that is mature enough to stand up to the Regulator’s scrutiny and supervision and, that the industry’s divergent business models can achieve true sustainability and profitability whilst leveraging new strategic relationships.

Grant Thornton’s specialists focus on what is driving the agenda in boardrooms and appreciate the agility with which entrepreneurial Marketplace Finance businesses make their decisions.

We highly value our relationship with Grant Thornton for a number of reasons; they have the answer to everything we ask without the need to continuously put out tenders, their reputation in the market place goes a long way when we talk to new partners and their relationship team do a great job, even when under tight time pressures. In the past we have used smaller boutiques for individual pieces of work however often this has left a bad taste because of poor delivery and their lack of understanding across all areas – with Grant Thornton, they have nailed it every time.

Nick HardingCEO Lending Works

Marketplace finance is the concept of bringing together the investors and the users of finance (including, debt, equity, reward and donation). The sector has evolved rapidly, disrupting Banks’ traditional business models. While initially aiming to bypass the financial system altogether, some of the sector’s biggest players are now partnering with banks and asset managers.


The state of play

The Marketplace Finance sector is growing; so is the competition

• The UK Marketplace Finance sector is growing rapidly and is predicted to provide financing of £4.4 billion in 2015. This is attracting the attention and backing of established finance providers and institutions

• This rapid growth is boosting awareness of the industry, albeit from a low base. However, regulatory scrutiny is increasing, and banks are increasingly aware of the competitive threat/opportunity

Management teams require specific skills

• Platforms are led by entrepreneurs who have considerable experience in finance and technology. Even so, their thirst for multi-disciplinary talent, be it finance professionals, developers or marketing gurus, is insatiable

• Regulators are looking for competent and risk mature management teams and CEOs need industry experienced NEDs and advisers to compliment their skills, understand the journey they’re on, and support them going forward

Incoming and increasing levels of regulation

• The FCA has adopted a balanced yet evolving approach to an industry that is grappling with new regulation covering; investor protection, governance, business continuity as well as prudential regulation

• Managing regulatory complexities at an acceptable cost is key to the profitable survival of these firms and the industry

Scalable IT enabled and user centric business platforms

• Once launched, Marketplace Finance providers’ highly digitised business models, processes and client interfaces allow for rapid scalability. This must be supported by best-of-breed user systems architecture and resilience

The need to future proof high growth businesses

• The industry’s success to date, epitomised by Lending Club’s recent IPO, demonstrates the industry’s potential

• With such goodwill at stake, Marketplace Finance platforms need to combine the agility and client centricity of a start-up with the regulatory and technological maturity of more established players

The UK tax regime offers the sector an enviable advantage

• The UK tax regime is adapting to provide investors attractive tax incentives to invest via the Marketplace Finance industry. These incentives give providers a potential market advantage, albeit it at some administrative cost

Incentivising talent to grow with your business – over the long term

• The battle for talent is intense by virtue of the unique combination of skills required to succeed in an industry that sits on the boundary of the financial and digital worlds

• Providing innovative long term incentive plans and rewards, coupled with inspired leadership and ambition is required to retain the people needed to deliver success


How Grant Thornton can help

From the experience we have developed through working with platforms across the industry, we can support firms to unlock their potential for growth.

Lending expertise from experienced industry practitionersThe management teams at the helm of these platforms come from a myriad of backgrounds. However, clients, investors and regulators expect high quality, client-centric financial services from these platforms.

Grant Thornton’s consumer and SME finance team combines industry, product, and asset knowledge with a core service offering that enables us to support and compliment management teams.

Navigating the complexity of complianceWhilst the FCA shares the government’s desire to make Marketplace Finance more secure whilst maintaining its accessibility, the quick rate of learning and change amongst industry stakeholders is creating a fluid regulatory environment. This is proving costly to navigate for both firms and regulators.

Our understanding of the market and the challenges facing firms enables us to design solutions and deliver the assurance and outcomes that our clients and the Regulators require.

Future proofing the tax profile of the business and preserving wealthAs fast growing privately-owned businesses operating in a rapidly evolving tax environment there are a number of challenges to consider – both now and as part of future growth or exit plans.

Our teams advise on all aspects of a business’s tax exposure including; dealing with the complexities of the tax system, developing tax efficient corporate structures, advising on reward schemes, as well as EIS/SEIS and R&D relief.

Optimising digitally enabled finance platformsAssessing the capability and appropriateness of IT applications, resourcing and infrastructure in fast growing businesses requires forward thinking and innovative solutions that compliments existing, often proprietary technology.

We have a pool of 200 information technology experts who provide services to some of the largest financial services companies in the UK providing services such as cyber security and IT resilience.

Financing growthWhilst access to finance is not a challenge for the industry, identifying the right partner at the right valuation is.

Our relationships with a network of equity and debt funders, and our work with Marketplace Finance firms at various stages of their lifecycle, gives us the insight and connections to enable firms to raise the capital they need to support their growth agenda and strategic ambitions.

Industry advocates driving awarenessUK Crowdfunding Association estimates that only around 3% of the population have an understanding of what crowdfunding is, creating barriers to investment and funding opportunities.

Grant Thornton is a supporter of the UK Crowdfunding Association and has been appointed by the government to deliver the Growth Accelerator programme meaning it is fully engaged with many of the issues affecting the industry.

Audit and accountancy servicesOur understanding of the Financial Services industry, our technical accounting and tax expertise and proactive approach enables us to support clients by providing audit and accountancy services tailored to the needs of our clients.

We are able to provide outsourced services (including payroll, VAT, management accounting) as well as audit services complying with FCA reporting requirements.


Trusted adviser to the Marketplace Finance industry

We have been very active in the sector:

GrowthAcceleratorGrowthAccelerator is a unique service led by some of the country’s most successful growth specialists. Fast growing and dynamic businesses use the service to find new connections, new routes to investment and the new ideas and strategy for businesses to achieve their full potential.

Grant Thornton, through its delivery of the programme, is naturally aligned to the Marketplace Finance industry and its clients.

Lending WorksGrant Thornton has worked with Lending Works since they were pre-revenue providing ad-hoc advisory services, such as regulatory support and financial modelling. The relationship has now developed into a full service client relationship and Grant Thornton now provides tax, audit, transaction support, and regulatory support.

Our recent thought leadership on the sector:

Grant Thornton is a supporter of the UK Crowd Funding Association

Unlocking new high growth potential

GrowthAccelerator

Through the GrowthAccelerator contract that Grant Thornton manages for BIS, we are best placed amongst our competitors to take a bird’s eye view of the SME funding landscape

of clients would recommend GrowthAccelerator

96%

of clients satisfied with their Growth Coach

92%

of clients satisfied with their Growth Manager

88%

of clients on track to achieve their growth plan milestones

96%

has been raised in finance through the GrowthAccelerator

million£130

said their initial assessment provided clarity on how to drive growth

78%

of business leaders says they are likely to grow as a result of the GrowthAccelerator

94% The average growth rate in GrowthAccelerator clients is

32%7%

said they got something from GrowthAccelerator they couldn’t get elsewhere

77%

of GrowthAccelerator clients had sought strategic business advice in the last two years

only32%Client feedback

compared to the UK average SME at



A multi-disciplinary team of sector experts

• Tarun leads Grant Thornton’s Leasing, Asset and Consumer Finance sector team and is also the head of the Financial Services Corporate Finance team advising on restructuring, debt raising and M&A

• Before joining Grant Thornton, Tarun work in the Motor Finance/Leasing Industry as a Finance Director for a number of years

• Jake has been working with Marketplace Finance companies for the last 18 months and is the relationship lead on a number of key clients in the sector

• Jake, who has worked in strategic and corporate finance advisory for the last four years, has advised Marketplace Finance providers on a number of issues including reward structures, corporate structuring for regulatory purposes and capital raising

• David has spent more than 20 years working across a wide section of Financial Services businesses

• Whilst David is an audit specialist he has across Reporting Accounting assignments, IPO’s and due diligence assignments

• David has significant experience in the alternative finance space including clients in the P2P, leasing and consumer finance sectors

• Peter joined Grant Thornton after 25 years’ lending experience in the consumer finance, motor finance, commercial finance and banking sectors, latterly with Lloyds Banking Group. He has run a number of subsidiaries of banks and US consumer finance companies

• Some of Peter’s key experiences includes:

– being asked to replicate the HBOS Capital Bank Motor business in one of the European markets following the success of the UK operation

– running the most successful division of the HBOS’s Capital Bank Motor operation

Tarun MistryFinancial Services - Corporate FinanceT 020 7728 2404E [email protected]

Jake Wombwell-PoveyFinancial Services – Corporate FinanceT 020 7865 2569 E [email protected]

David PearsonFinancial Services - AuditT 020 7728 2147E [email protected]

Peter LandersHead of Consumer FinanceT 020 7865 2792E [email protected]


• Sarah is a senior manager on the Access to Finance stream of GrowthAccelerator and leads all investor relations activity within Business Growth Services at Grant Thornton, including relationships with crowdfunders, business angels, venture capitalists, banks and peer-lending platforms

• Aside from her roles at Grant Thornton, Sarah also sits on the Advisory Committee for the EIS Association, the UK’s official trade body for the Enterprise Investment Scheme and the Seed Enterprise Investment Sheme

• Manu has over 13 years experience in the financial services sector providing Information Risk Management and Information Security and now leads the firm’s Cyber Security team

• Jon specialises in the regulation of the financial services sector. His experience is based on nearly 20 years’ experience advising regulated firms and regulators, both in the UK and overseas

• Jon has provided practical, pragmatic advice to a wide range of firms including consumer finance firms, mortgage brokers, insurers, banks and building societies

• Terry has significant experience of advising P2P and crowdfunding platforms on corporate structuring, fundraising, EIS and EMI schemes

• Terry has advised on efficient acquisition structuring and has completed a number of international restructuring projects to assist his clients with maintaining competitive advantage in achieving their expansion goals

• Terry is a UK Chartered Tax Adviser (‘CTA’) and an Enrolled Agent with the IRS. He also sits on the UK Crowdfunding Association taxation working panel

Sarah AbrahamsBusiness Growth Services – SME FinanceT 020 7728 2497 E [email protected]

Manu SharmaFinancial Services – Cyber securityT 020 7865 2406E [email protected]

Jon SperrinFinancial Services – RegulatoryT 020 7728 2561 E [email protected]

Terry HeatleyAssociate Director – Financial Services TaxT 020 7865 2685E [email protected]


About Grant Thornton UK LLP

We combine award-winning technical expertise with the intuition, insight and confidence gained from our extensive sector experience and a deeper understanding of our clients.

Through empowered client service teams, approachable partners and shorter decision making chains, we provide a wider point of view and operate in a way that’s as fast and agile as our clients.

The real benefit for dynamic organisations is more meaningful and forward-looking advice that can help to unlock their potential for growth.

International Accounting Bulletin (IAB) 2014 Network

of the Year

Global Firm of the Year British Accountancy Awards

2013

Best Tax Team in a National Firm Corporate and International Tax and Transfer Pricing team

LexisNexis Awards 2014

Accountancy Firm of the Year (larger clients) FDs’ Excellence

Awards 2014

Ranked number one corporate finance adviser in the UK

(Source: Experian Corpfin 2013)

Managing Partners’ Forum Awards 2014

Best managed international firm

Corporate Finance Advisory Team of the Year

2013, 2012, 2011

UK offices25

Winner of network of the year 2013International Accounting Bulletin

Largest auditor – Small Cap/Fledgling market

5th

Largest auditor – UK’s top privately-held companies

4th

UK employees4,200

FTSE 100 are non-audit clients

42%

Partners185+


Notes

© 2015 Grant Thornton UK LLP. All rights reserved.

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires.

Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL).GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for oneanother’s acts or omissions.

This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining fromacting as a result of any material in this publication.

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