Peer-to-peer lending and crowdfunding 2020 data published

New Zealand’s peer-to-peer lending (P2P) and equity crowdfunding sectors experienced steady growth in the last year, according to data from the Financial Markets Authority (FMA).

The FMA today released its fourth statistical report on the sectors for the year ended 30 June 2020. The report covers activity by licensed P2P and crowdfunding providers that provide annual information returns to the FMA.

The number of registered investors on P2P platforms is now more than 34,000. While the number of investors with open investments increased slightly to 12,800, the total amount of outstanding loans on the lending platforms books was $624 million, up 8% over the year from 2019-20. These numbers have increased substantially since 2017 when there were 8,000 open investments and approximately $360 million in outstanding loans.

Meanwhile, equity crowdfunding providers raised $16.5 million from retail investors in the year to June 2020, a 20% increase from 2019. Licensed crowdfunding platforms introduced 25 successful offers, compared to 19 in the previous year. 5,300 investors were using the licensed service in 2020. The total money raised by crowdfunding platforms was $34 million, including from retail and other wholesale investors.

The report shows a stable level of participation in a relatively niche sector of New Zealand’s capital markets, said Sarah Vrede, FMA Director of Capital Markets.

“One of the main intentions of the Financial Markets Conduct Act is to promote innovation and flexibility in New Zealand’s capital markets. Peer-to-peer lending services provide an alternative form of borrowing and fixed-income investment, while equity crowdfunding services provide an alternative pathway for companies to raise capital in a cost-effective manner. The data released today shows continued interest in these sectors as they mature,” Ms Vrede said.

P2P lending

Most P2P lending providers saw growth in the value of their outstanding loan books, with the value of new loans trending more towards businesses than individuals.

Harmoney remained the largest P2P lending service provider in the year, accounting for more than half the industry’s outstanding loans. It withdrew from accepting retail lenders in April 2020, which will have an impact in subsequent year’s annual data returns.

Crowdfunding

The number of retail investors participating in equity crowdfunding offers jumped 47% on the previous year to 5,374 – with a noticeable increase in smaller value investments.

“A consistent trend has emerged that crowdfunding investors are generally first-time users of a platform, which may suggest investors have targeted interest in the specific company raising capital,” Ms Vrede said.

Of the 30 offers, 25 were successful. Although the number of successful offers was lower than the 2017 peak of 34 offers, the amount of capital raised by licensed retail investors in 2020 was 38% higher than 2017.

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