RateSetter

RateSetter is a British peer-to-peer lending company based in London, founded in 2009 and trading in the United Kingdom and (from 2014) through a subsidiary in Australia. The UK business was acquired, subject to regulatory approval, by Metro Bank in August 2020.

Retail Money Market Ltd
RateSetter
FateIn the process of being acquired by Metro Bank
Founded2009
FounderRhydian Lewis, Peter Behrens
Headquarters
London
Area served
UK, Australia
ProductsFinancial services
Websitewww.ratesetter.com

The company is known for having introduced into peer-to-peer lending the concept of a "provision fund" – an internal fund which aims to help lenders manage the risk of borrower default, and is generated by borrowers' payment of a "credit rate" fee based on their credit profile. Launched in October 2010, by June 2018 the company had matched more than £2.5bn in loans and had over 500,000 investors and borrowers.[1] As of June 2018, RateSetter claims that none of its individual investors have ever lost money.[1]

History

RateSetter's holding company, Retail Money Market Ltd, was incorporated in October 2009 by Rhydian Lewis, an investment banker from Lazard, and Peter Behrens, a lawyer turned banker formerly of Royal Bank of Scotland.[2] The private limited company was funded from the start by angel investors.[3][4]

In July 2014, it was announced that the British Business Bank would begin lending through RateSetter to support individuals, sole traders or partnerships borrowing for business purposes.[5] In December 2015, RateSetter moved from Southwark to new offices in Bishopsgate, London.[6]

In June 2017, RateSetter raised £13m from existing shareholders, including Woodford Investment Management and Artemis, bringing the total amount raised to £41.5m.[7][8] The following month, Paul Manduca became chairman of RateSetter;[9][10] he is also chairman of Prudential plc.

RateSetter's lending had an average gross yield of 8% in 2019–20.[11]

Sale to Metro Bank

Metro Bank plc, a London-based retail and commercial bank, announced in August 2020 that it had agreed to acquire Retail Money Market Ltd for a price of up to £12 million, with £2.5 million paid upfront and the remainder to be paid over the next three years; the latter component is conditional on meeting certain performance criteria. Metro Bank are to acquire 100% of RateSetter shares but its stake in RateSetter Australia, valued at £13.7 million, is excluded from the transaction. The purchase is subject to regulatory approval and the agreement of RMM shareholders, and was expected to complete in the fourth quarter of 2020. Metro Bank would continue the RateSetter brand and its operations, but new unsecured personal lending would be funded by the bank's deposits, not through peer-to-peer.[11] The announced purchase price marks a sharp decrease in the company's value, which was £200m during its last round of funding in 2017.[7]

Ratesetter in Australia

Plenti Pty Limited (previously known as RateSetter Australia) commenced operations in November 2014.[12] The Australian branch, with the office located in Sydney, is managed and majority-owned locally, and was the first peer-to-peer lending platform in the country open to retail customers.[13]

In December 2017, it was announced that over AU$200m had been lent via the platform.[14] In 2019, 14% of the company was owned by Retail Money Market Ltd.[15] This holding was not included in the 2020 acquisition of the UK business by Metro Bank.[11]

Products

Borrowers can apply for a loan for between 6 and 60 months. The company has strict lending criteria, accepting (in 2011) between 12 and 15 per cent of borrower applications.[16]

References
  1. "Data Hub". RateSetter. Retrieved 4 June 2018.
  2. Hurley, James (7 October 2010). "Ratesetter aims to tap social lending growth". The Daily Telegraph. London. Retrieved 10 September 2011.
  3. Titcomb, James (19 September 2015). "Peer-to-peer lender Ratesetter doubles sales as it targets listing". The Daily Telegraph. Retrieved 3 November 2015.
  4. Hazlehurst, Jeremy (9 October 2013). "New Generation Moneylenders". Management Today. Retrieved 10 September 2011.
  5. Vicki Owen (13 July 2014). "Government-owned British Business Bank to begin lending £10m through peer-to-peer lender RateSetter". This is Money.
  6. Lucy Bott. "We are moving". RateSetter Blog. Retrieved 7 December 2015.
  7. Nair, Praseeda (1 June 2017). "RateSetter hits highest valuation at £200m after recent funding round". Growth Business. Retrieved 4 August 2020.
  8. Martin, Ben (30 May 2017). "Peer-to-peer lender Ratesetter valued at £200m in latest fundraising". The Daily Telegraph. Retrieved 4 June 2018.
  9. Williams-Grut, Oscar (15 May 2017). "Fintech lender RateSetter lands FTSE 100 heavyweight as new chairman". Business Insider. Retrieved 4 June 2018.
  10. Elizabeth Pfeuti. "Ex-Deutsche funds chief joins Woodford-backed fintech". Financial News. Retrieved 4 June 2018.
  11. "Acquisition of RateSetter". Metro Bank. 3 August 2020. Retrieved 3 August 2020.
  12. Shaun Drummond. "RateSetter targets Australian 'savers' with new lending website". The Sydney Morning Herald. Retrieved 11 November 2014.
  13. "About us - RateSetter Australia". www.ratesetter.com.au. Retrieved 4 April 2017.
  14. "RateSetter passes $200m | RateSetter Australia". www.ratesetter.com.au. Retrieved 26 January 2018.
  15. "Annual Report and Consolidated Financial Statements". Companies House. Retail Money Market Ltd. 31 March 2019. Retrieved 3 August 2020.
  16. "Small but mighty: Online lending's growth market". The Scotsman. 19 June 2011. Retrieved 10 September 2011.
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