A common question in the marketplace lending industry is what needs to happen for the industry to really hit its stride and reach massive scale. This is more important today since getting a loan online is becoming ubiquitous. On the consumer side there certainly needs to be more education but on the funding side platforms need to engage the largest investors in the world. LendIt Co-Founder Jason Jones touched on this in a recent post on engaging the gatekeepers and educating them on marketplace lending.
Some of the largest money managers are insurance companies. Last month we learned that Aegon, a Dutch insurance company (and parent company of Transamerica) was allocating €1.5 billion to German p2p lender Auxmoney. This is the largest publicly announced commitment we’ve seen to date from a single investor in the marketplace lending industry. Aegon had previously committed €150 million to the auxmoney platform in 2015. Another large deal in the US was announced in November, 2016 when Lending Club secured a $1.3 billion commitment from Credigy.
According to the announcement from Aegon and Auxmoney, the funds will be deployed over the next 3 years. Aegon also lead a new €15 million Series E investment in the company.
Conclusion
While the amount was a surprise, it was not unexpected that Aegon would expand their footprint in marketplace lending. Insurance companies, particularly those in Europe, have a problem. They desperately need fixed income yield but many of the traditional avenues have yields close to zero. This will not likely change any time soon in Europe.
Large firms such as banks, insurance companies, pensions etc. are going to increasingly play a role in the marketplace lending industry. It remains one of the best fixed income alternatives. I believe this is just the start of many deals that will eventually be announced as firms like Aegon become aware of the value that many marketplace lenders offer.
