More than $6bn was invested in Marketplace Lending companies during the first nine months of the year
- Marketplace Lending companies raised almost $31.2bn globally between 2014 and Q3 2019, with $7.7bn of this invested in transaction valued at $250m and above.
- Annual funding peaked in 2017 with $6.3bn invested that year, driven by large deals such as the $1.2bn Series B raised by Chinese online lender Lufax in Q4 2017. However, almost $6.1bn has been invested in marketplace Lending companies so far this year already, putting investment on track to surpass the record set in 2017.
- The Marketplace Lending subsector has experienced significant growth since the financial crisis, as non-bank lending companies entered the market, and global coordinated monetary policy has led to credit expansion across various regions of the world.
Deals have been shifting from North America to other regions of the world since 2014
- North American companies captured almost a third of the deal activity in the Marketplace Lending subsector globally between 2014 and Q3 2019, a larger share than any other region.
- However, the proportion of deals in the region has declined from almost half of deals in 2014 to just over a quarter of deals in the first nine months of 2019, as the share of deal activity has shifted to other regions of the world, namely Europe and Asia.
- Marketplace Lending companies in Europe have captured 26.2% of global deal activity since 2014, as negative interest rates and regulation around lending requirements limit European banks ability to extend credit to small businesses, enabling alternative SME finance providers in the region to step in.
- The United Nations has highlighted the large underbanked population in Asia and other regions coupled with the subsequent lack of credit history that has precluded many consumers and businesses from receiving loans from traditional financial institutions. Consequently, online lending companies have sprung up to capitalise on the democratisation of credit and to fill the funding gap that exists.
Online Loans companies have captured more than a third of the Marketplace Lending investment globally since 2014
- Almost $31.2bn was invested in marketplace Lenders globally between 2014 and Q3 2019, across almost 1,500 transactions.
- More than a third of the total capital ($10.7bn) invested in the sector since 2014 was raised by companies operating in the online loans subsector of Marketplace Lending.
- DMI Finance is a digital lending platform, headquartered in New Delhi, that provides online consumer, corporate and housing loans across India. The company raised $230m from New Investment Solutions in January 2019, which was the largest Marketplace Lending deal in Asia this year.
- SME Finance providers captured 27% ($8.4bn) of the total capital raised in the sector between 2014 and Q3 2019. This significant share, which has been driven by the regulatory environment, quantitative easing and the monetary policy adopted by central bankers over the past decade, has been particularly problematic for small business lending, which has spawned growth in non-bank SME lenders providing working capital and asset based finance to businesses.
Half of the top 10 Marketplace Lending deals this year have involved Online Lending companies
- More than $2.1bn was raised in the ten largest Marketplace Lending deals in the first three quarters of 2019, which is equal to more than a third of the total capital invested in the sector globally during the period.
- A breakdown of the top ten deals shows that half of the top ten deals involved online lending companies and three transactions involved SME Finance providers. The lack of P2P deals in the top 10 may be explained by the introduction of tighter regulations on P2P lending in China at the end of 2018 and the UK in early 2019, with the industry expecting continued capital outflows a result.
- SoFi, an online provider of home loans, personal loans and student loan refinance based in San Francisco raised $500m from the Qatar Investment Authority in May 2019. This was the largest deal in the subsector this year, valuing the company at $4.8bn.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2019 FinTech Global
