DBS

47 you can only have one of the IFISAs in a year. But you can invest in an ISA account now and deploy those funds over the following months. It’s the cash that is the ISA qualification – you don’t have an ISA until you put the cash into your ISA. And now, with the flexible ISA, you can now put the full amount of cash into an ISA account and even if you withdraw it within the tax year, as long as you put it back in within that tax year, you keep the allowance. This makes it much easier to invest in things which don’t have constant availability. You can reserve your allowance and then when you need to, you can put the cash back in and then buy the investments. It is just over a year since we launched our first crowd bond, and this is a significant step for Downing. For over 20 years, we’ve specialised in fund investments, and this is the first time we’ve offered direct lending outside a fund structure, provided we can offer some security opportunity to our investors. So, it’s a really important strategic time for us, and, so far so good. We have the advantage of more than 20 years’ experience in investment management, a strong network of borrowers, and more than £800 million of assets under management – to date all of our Crowd Bonds have been issued by companies that we have been working with for years. I think it can be a real challenge for IFAs to get their heads round alternative finance, so a lot of my time in the last six months has been spent talking to Advisers and setting up an IFA portal to give them advance notice on bonds and to allow them to make reservations for clients and claim or rebate their commission. Perhaps the biggest change for the firm has been the degree of transparency on investments – because every bond has a full offer document, we can set out our due diligence (DD): our minimum bond size is £1m, but our average is over £2m, which is essential really as Downing isn’t about to do less DD on Crowd Bonds than we do on our fund investments, so scale is really important if we want to do a proper job without charging high fees. We also decided to put some skin in the game by making our monitoring fee contingent on the investors getting their capital and interest back, and that has been really well received. Just that feeling of alignment with investors helps a lot. The last 12 months has been a continuation and acceleration of Triple Point’s private capital leasing activity, a business we first launched over 10 years ago. Over the past decade we have obviously seen a huge amount of flux through different credit cycles but two consistent market themes have been the retrenchment of the banks away from SME lending and the downward trajectory of interest rates from 5% in 2006 to 0.25% today. Against this background, we were very pleased to launch, at the end of 2016, our new secured bond offering, which provides investors with an attractive yield via a user friendly online platform. This was a change for our business as it was the first time we offered our clients access to our SME leasing deal flow through a bond instead of a BPR product. Previously our minimum investment requirement was circa £500,000, whereas now our secured bonds are available at a minimum of £1,000. We also launched an Innovative Finance ISA, and can only echo what Jake and Bruce said, it has proved to be very popular and helped our initial secured bond tranche sell out in record- time. We are now issuing a prospectus for a second tranche of £100 million – making it the only FCA approved prospectus offer eligible for the IFISA. “Over the past decade we have obviously seen a huge amount of flux through different credit cycles but two consistent market themes have been the retrenchment of the banks away from SME lending and the downward trajectory of interest rates.” — James Cranmer, Triple Point We only launched our crowdfunding platform Property Crowd in January this year. Property Crowd is a debt based crowdfunding platform offering real estate backed investments in the form of bond issues. Whilst we can’t compare to previous year activity, what we can say is that early traction has been stronger than expected. The challenge we now face is the same that others face, which is to push awareness to a wider audience outside of the small investor community already active in the alternative finance space. Most notably, the independent institutional origination (which is an integral aspect of our business model and value proposition), in addition to our institutional grade custodian arrangements, have been particularly well received. WHAT DO YOU FEEL ARE THE MOST IMPORTANT FEATURES OF THE INVESTMENT CASE FOR DEBT BASED SECURITIES? There is a clear and obvious advantage that debt based securities in the form of bonds have over a P2P investment offering. The structuring required to enable the issuance of bonds creates an opportunity for the platform and the borrower to incorporate critical safeguards, governance and accountability. All of which benefit investors across the spectrum, but in particular, if structured appropriately, ensure viability for BRUCE DAVIS JULIA GROVES JAKE WOMBWELL-POVEY ROHIN MODASIA MATT TAYLOR JAMES CRANMER LISA BEST