UPDATED: Heartland invests in HarMoney funding, after taking 10% stake

UPDATED: Heartland New Zealand [NZX: HNZ] will invest a “meaningful amount” into peer-to-peer lender HarMoney after taking a 10 percent stake for an undisclosed sum in New Zealand's only licensed platform, the bank’s chief executive Jeff Greenslade says.

Christchurch-based Heartland said it will provide funding for borrowers on the platform, 

without putting a dollar figure on how much this might be. Auckland-based HarMoney launched its online platform earlier this month, where it matches individual borrowers with lenders looking to invest, and determines the interest rate on the loan based on the credit risk of the borrower.

“The platform is a channel so we’re just like one big depositor in one side of the channel as borrowers come in and the money is circulated through to borrowers,” Greenslade told BusinessDesk. “You don’t necessarily lend to one borrower, you’re lending to units and across a whole range of risk buckets and within those risk buckets, portions of individual loans.” 

Heartland, formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, has been chasing acquisitions outside of traditional banking to help grow earnings, and in February announced the acquisition of a reverse mortgage business from Seniors Money International for $87 million. In July, Motor Trade Finances turned down an offer from Heartland which would have added a loan book of some $438 million.

Greenslade said the bank is looking at a number of other acquisitions, without disclosing any further details. 

HarMoney was the first platform operator to receive a peer-to-peer licence under the new Financial Markets Conduct Act, which came into effect on April 1, providing legislation for a regime to match lenders with borrowers, with a $2 million cap on the amount allowed to be borrowed. The platform is looking to lure both investors and borrowers, offering loans of up to $35,000 with interest rates lower than credit cards for borrowers, and the possibility of a 12 percent risk adjusted return for lenders.

“We see it as a platform that gives us access to a customer base that we like anyway,” Greenslade said. “We like the concept in terms of the UK and the US, we think the model has been proven to our satisfaction overseas and also the nature of the channel being online just adds another dimension to our strategy.”

Shares of Heartland rose 3.1 percent at 99 cents and have gained some 13 percent since the start of the year.

(BusinessDesk)