Keeping you up to date on the world of Marketplace Lending
After 18 successful months in the New Zealand market, peer-to-peer company LendMe has changed its name to Zagga and successfully launched the platform in Australia.
CEO and co-founder Marcus Morrison says the new name better reflects the company’s future direction as both a strong investment vehicle and a marketplace lender.
“We’re not just about secured lending; we offer investors the opportunity to earn an income by investing in debt products. Traditionally investors have had five main vehicles for their savings – cash, term deposits, managed funds, the share market or property. But something we are seeing is that investors want yield from a product that they can understand, and where they can balance their risk and reward.
"Currently, rates are low, managed products are expensive, who knows where the stock price might be when you need to sell, and not everyone can afford to own their house and a rental property where they might have to wait 20 years to cash out on it. This is why we like to say, why zig when you can Zagga?”To coincide with the rebrand, the company has launched a new website here - www.zagga.co.nz
Morrison says the majority of investors in New Zealand to date have been people aged 55 and over who are keen to diversify and make their retirement savings go the distance. With Zagga, they receive monthly interest payments and all the loans are secured against borrowers’ assets, which are mostly first mortgages over property.
“We will continue to focus on this group, while also broadening our approach to take in high-net-worth investors, financial advisers and New Zealand’s 22,000 SMEs.”
In Australia, Sydney-based Zagga has a different target market to New Zealand and has already facilitated over $7m in loans in a matter of weeks, says Morrison.
“Given the size and scale of the Australian market, Zagga’s focus there will be on high-net-worth investors and financial advisers. While the scope is bigger in Australia, the fundamentals are the same, with all our loans secured against borrowers’ assets, which are mostly first mortgages over property.”
The chief executive of Zagga Australia is experienced banker and business consultant Alan Greenstein and the chair is Peter Clare, former CEO of Westpac New Zealand who, in addition to six years at Westpac, also spent seven years at the Commonwealth Bank of Australia and five at St George Bank.
Morrison says a new custom-built algorithm has been commissioned for Zagga in Australia which will build a “profile” for investors and then match their investment criteria to loans which are best suited to their requirements.
“We will then be able to find appropriate loans in the market and invite investors to consider these investment opportunities, each of which will be secured against property. This is a new development for our industry and Zagga Australia is currently the only provider offering this technology. This will also be rolled out in NZ soon”
Morrison says the platform has been “incubated” in New Zealand and now the company is in a position to expand into Australia and build volume and scale. In New Zealand, Zagga offers secured loans between $25,000 and $2 million. In Australia, the minimum loan will be $500,000.
Since launching in New Zealand as LendMe in February 2016, the company has processed more than $5 million worth of loans, the average of which was around $350,000 for a term of two years, with an LVR of 55%. The average investment is around $150,000 although it ranges from $1,000 up to $1.5 million. Investor returns to date have varied from 6.44% to 11.00% net of fees per annum. While all of these are backed by security over property, the range in return is a reflection of the type of loans and assessed risk profile.
Morrison says while there is no such thing as a completely risk-free investment, Zagga will strive to provide New Zealand and Australian investors with good returns, access to quality borrowers, regular monthly cash flows, and security on every loan.
“Importantly, we provide complete transparency of each loan and total control to investors to choose the loans they are willing to fund in part or full. And our borrowers receive competitive rates, flexible credit criteria, fast online applications, fixed monthly payments, and complete transparency throughout the process. For example, each loan listed on Zagga is assigned a credit assessment score based on data about the borrower, such as serviceability, credit history and the loan to security value ratio (LVR),” he says.