1st December 2014
“Supermum” Nicola Horlick – so dubbed for her ability to juggle a large number of children with City roles ranging from unit trust manager to film financier – wrote to thousands of potential investors last weekend to promote her new peer-to-peer small business crowd funding operation, Money & Co.
Despite the new tech image of P2P operations, Horlick, a Marmite figure with a big fan base but also a large number of naysayers, opted for old fashioned paper and envelope delivered courtesy of Royal Mail to deliver her message. Using a mailing list dating back to the late 1980s – at least one recipient was addressed as an employee of an organisation that disappeared 25 years ago in 1989, she says she wants to introduce her firm claiming investors could net 6 per cent per annum before tax.
This is based on an average current loan book – she has raised £3.4m so far – which now yields more than 8 per cent, less 1 per cent for fees and a further 1 per cent for “potential bad debts”. It’s important that whatever you receive is paid after bad debts otherwise you will be taxed on the element you do not receive.
Whether one per cent for bad debt provisions is realistic or optimistic depends on how Horlick doles out the cash to businesses. Zopa, which lends to individuals, so far has only lost 0.7% but Funding Circle, which specialises in small firms, has seen 1.5% evaporate. One small lender – there are at least 15 P2P firms in the market – has had bad debts amounting to a quarter of what it lent. Those lending to businesses will almost certainly see an eventual increase in bad debts as it can take a number of years between receiving a loan and a company failing.
Horlick is launching a portfolio service aimed at those with at least £100,000 which will be managed by her firm according to “investment timelines”. She also hopes to set up a pooled investment vehicle in 2015 to be eligible for ISA investment.
Money & Co, which is not a current member of trade body the P2P Finance Association, is inviting potential investors to meet Horlick at events to be held around the country.