DIY Investor Magazine
/
Jan 2017
34
Platform Black enables investors (or ‘funders’) to buy
into short-term corporate debt by facilitating invoice
trading and factoring through an online auction process.
Funders access the platform on being alerted that an
auction has been launched, then bid for all or part of a
total sought. The auction closes and ‘winning’ funders
transfer the balance, less the discount fee, to the
platform for passing on to the business.
On the due date, the ‘end-debtor’ pays the invoice,
the balance passing back to funders. Late payment
brings funders a 50% uplift on their return for each day
overdue.
‘even in uncertain economic times such as these,
there is still scope for the portfolio of a discerning
investor to comfortably grow’
This service is open to institutional investors including
funds, family offices and asset-based lenders as well
as pre-qualifying high-net-worth individuals and self-
certified sophisticated investors who are able to commit
a minimum of £50,000. Investors using Platform Black
should note, however, that asset-based financing is not
regulated by the FCA.
Still in its relative infancy, peer-to-peer lending has been
under the watchful eye of the FCA since April 2014,
with the regulator’s approach often heralded as one of
the most forward-thinking in the world. Moreover, the
Government’s introduction of the IF ISA not only serves
to redouble their dedication to and recognition of P2P,
but offers yet another attraction for investors to consider.
However, unlike savings with UK banks, investments in
peer-to-peer products are not covered by the Financial
Services Compensation Scheme.
No investment is without risk, so the onus is very much
on platforms to disclose ample information to investors
to help them to make an informed decision, and then on
investors themselves to use this information to assess
risks fully – if and how the debt is secured and where it
ranks amongst the issuing company’s existing debt, for
example.
Alternative sources of income are now numerous thanks
to new financial technologies so, even in uncertain
economic times such as these, there is still scope for
the portfolio of a discerning investor to comfortably
grow.
Peter is an experienced adviser to companies,
private-equity investors, advisory firms, business
organisations and educational institutions
