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  • Jupiter published the prospectus for the Merian acquisition yesterday which is expected to complete on 1 July. While the equity yield is 6.4% the 8.875% bonds trade at 105%.

Funding Circle – P2P News

Share Price 71p

Mkt Cap £248m

Conflict Disclosure: No Holding 

  • News Press reports arrive that Ratesetter may be sold to Metro Bank for as little as £25m while some suggest £50m. Ratesetter is loss making with a £850m loan book equating to between 2.9% and 5.8% of loans under management.
  • Funding Circle, at £250m mkt cap with £150m cash, trades at and EV of 2.7% of its £3.7bn loans under management.
  • Zopa was valued at c£188m at September 2019 since when it has obtained its bank license. Augmentum’s c 6% stake in Zopa accounted for c 9% of its NAV.
  • Conclusion The Metro Bank source states that Metro wants Zopa for its technology as “Metro doesn’t have the sophistication of data to make an informed decision” on lending. Funding Circle has been approved to lend the US Paycheck Protection Program and UK bounce back loans but with a c 120 day queue to sell your loan on the platform I am unclear that Funding circle should trade above cash 

Manx Financial – FY Results

Share Price 7p

Mkt Cap £9m

Conflict Disclosure: No Holding

  • Results to December show strong growth with 21% loan book growth to £179m and a £1.9m impairment charge taking provisions to 2.7% of the loan book. Interest income on the loan book was c13%, and NIM was 10%. The IFA business continues to grow its recurring income and the FX business grew modestly. New lending has slowed and forbearance increased during lockdown but they remain open for business.
  • Estimates None 
  • Valuation PE 4.2. Share trade at 50% discount to tangible book value.
  • Conclusion Useful reminder of how cheap small illiquid banks can be when significantly owned by Jim Mellon and Aaron Banks.

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