Private Equity Lines Up to Buy Crowd Funding Debt

[Corey Dutton]

Private equity is starting to pay attention to this ever growing trend in private money lending of raising capital via crowdfunding platforms, also called peer-to-peer lending (P2P Lending). For those who still don’t know much about this new form of private money lending, P2P Lending is a loan that comes from individuals instead of a bank. Such lending platforms offer consumer loans for between $1,000 to $30,000, and interest rates are between 6% to 30%, with loan fees of between 1% to 5%. Private equity is definitely starting to see the benefits of securitizing these massive tranches of debt being generated by these P2P lending platforms.

BlackRock purchased approximately $330 MM in consumer loans this year that were made by ‘Prosper,’ which was America’s first P2P lending platforms. BlackRock plans to securitize this debt by slicing and dicing it up and selling it off to investors the “old school” way. In fact, a new US based investment management company called ‘Prime Meridian’ offers two funds that only invest in P2P loans.

For those of us who have always thought that crowdfunding was a trend and nothing more, we may be starting to think otherwise!

Read the entire article here: http://bankinnovation.net/2015/07/from-p2p-lending-to-lending-marketplaces-the-graceful-dance-has-started/