Heartland pumps in $4m to Harmoney to boost stake

Heartland Bank, the NZX-listed lender, has lifted its stake in Harmoney Corp, injecting $4 million of new equity into the peer-to-peer lender.

The Auckland-based bank paid about 50.9c  apiece for almost 7.9 million shares, increasing its stake to 13% , filings to the Companies Office show. That's the same price as was paid by Stone Ridge Ventures and P2P Global Investments when they pumped $8.8 million into Harmoney in its last capital raise in February.

Harmoney said the funds raised will support the P2P lender platform's "exceptional growth," which has seen $320 million of loans facilitated and earned $32 million in interest for investors.

"Heartland's investment comes on the heels of increased consumer demand," Harmoney joint chief executive Brad Hagstrom said in an emailed statement. "The investment is a vote of confidence in the future and growth prospects of Harmoney."

Harmoney burned through almost $13 million of cash in the year ended March 31, leaving it with about $8 million in cash and equivalents at balance date. When it reported its annual earnings in late July, it had brokered $275 million of loans through its portal.

In February, Harmoney had $30 million in the bank from the injection from Stone Ridge Ventures and P2P Global Investments when it was eyeing a foray across the Tasman. Co-chief executive and its biggest shareholder, Neil Roberts, said at the time he didn't envisage raising more funds until Harmoney was cashflow neutral, which it would then use to develop into a large-scale business.

Harmoney got a head-start as the first mover in the market but is facing increased competition from the arrival of other licensed P2P lenders Squirrel Money, LendMe, Lending Crowd and PledgeMe, which also operates a crowdfunding platform.

The company today said its new products such as Auto Lend, Payment Protection and improved credit scoring had been "positively received by the market."

In August, Harmoney said it would plead guilty to six charges relating to a pre-approval letter sent in various forms to more than 500,000 New Zealanders between October 2014 and April 2015, which misled recipients by telling them they had been pre-approved to borrow money.

This week, ACT Party leader David Seymour called for Commerce Minister Paul Goldsmith to give P2P lenders more flexibility about how to charge, claiming the Ministry for Business was "advising the minister to apply fee restrictions to these companies as if they are traditional lenders, despite the fact that they are not actually lenders, but intermediaries connecting personal lenders with borrowers."

(BusinessDesk)