DirectMoney to launch retail fund in May

Peer-to-peer lender DirectMoney, which could be listed on the Australian Securities Exchange in the next couple of months, will open its business to retail "lender/investors" next month, when it launches a pooled fund.

Unlike other P2P lenders, such as RateSetter, which allow lenders to select individual loans, DirectMoney will pool retail investor money in a managed fund.

It said this was a safer environment and one that retail investors were familiar with. It said another advantage was that it would reduce the complexity of the lending platform and lower IT costs.

Basper Ltd, which last month announced a plan to acquire lender DirectMoney, announced on Friday that it has entered into a mandate with Bell Potter Securities to act as lead manager for a A$10 million capital raising offer.

Bell Potter has provided an in-principle agreement to underwrite the offer. Part of the funds will be used for the DirectMoney acquisition.

Basper said it expected to issue a prospectus for the offer late in May.

Also on Friday, DirectMoney issued an investor presentation, providing a few more details of its business structure. It earns revenue by charging borrowers a "platform fee" upon the origination of a loan and by charging "lender/investors" an annual fee based on loans under management.

DirectMoney did not say what its platform fees were but said the market range was two to five per cent for borrowers and one to two per cent for lenders.

The company, which started lending last October and has a $6 million consumer loan book, relies on the sort of internet-sourced credit information used by successful overseas peer-to-peer lenders like Lending Club and Zopa.

That information includes credit scores provided by groups such as Veda, automated analysis of bank transaction details provided by companies such as Yodlee and social media data.

Like other new lenders, DirectMoney is hoping to take share from the big banks by using efficient systems to offer competitive rates. It estimates that the average net yield on a consumer loan in Australia over the past few years has been 10.9 per cent.

It will also use loan warehouse funding, claiming it allows for faster loan settlement.