Canada’s pension fund leads £210m fundraiser in UK’s Lendable
The Ontario Teachers’ Pension Plan has led a £210 million funding round in UK fintech group Lendable, as Canada’s largest single-professional pension fund deepens its market penetration private.
Lendable, headquartered in London, was founded in 2014 and has built a technology platform to connect global institutional investors with borrowers across loans, credit cards and car finance. The new fundraiser values Lendable at £3.5bn, an increase from last year, when it sold shares at a valuation of over £1bn.
Ontario Teachers’ investment comes at a time when asset allocators are rushing to private markets over fears that returns on publicly traded assets will be limited in the future after a strong rally in recent years. Already in 2022, tech stocks have fallen as traders brace for central banks to tighten monetary policy.
The C$227.7 billion fund made the investment through its Teacher Innovation Platform, which was launched nearly three years ago to focus on early stage growth and venture capital investments. advanced in technology companies in the United States, Europe and Asia, with ticket sizes between $50 million and $250 million. The new platform reflected the plan’s desire to diversify its investments and seek returns.
Morgan Stanley has estimated that growth stocks are the fastest growing slice of the private equity world. Growth equity investments typically fund well-established but even younger, fast-growing private companies in exchange for minority stakes.
Avid Larizadeh Duggan, executive director of Ontario Teachers’ Innovation Platform, joined last year to strengthen its presence in Europe. She said: “It’s long-term capital and we choose our investments with a long-term view of sticking with these entrepreneurs and businesses.” She said unlike typical venture capitalists who exit when an investment floats in the stock market, Teachers’ “may have the ability to be cross-investors when these companies go public.”
Larizadeh-Duggan said Ontario Teachers’ goal is to increase its investment in high-growth businesses from $5.7 billion to $20-25 billion over the next five years, in line with the growth of the larger program. His other investments in the UK include Beamery, a talent management platform; ComplyAdvantage, a company that provides anti-money laundering technology, and Graphcore, a semiconductor company that develops accelerators for AI and machine learning.
Other major asset allocators are also branching out into private markets in the region. AustralianSuper, the country’s biggest pension scheme, said in February it planned to invest £23bn in the UK and Europe over the next five years investing in property, infrastructure and private credit. The Caisse de depot et placement du Quebec, another large Canadian pension scheme, plans to pour £9 billion into private British and European assets.
Martin Kissinger, founder and chief executive of Lendable, said the latest funding round will help “accelerate growth” both in its existing markets and in the United States, where it opened an office last year. He said Lendable will eventually look to add new products in areas like “buy now, pay later” and expand into new markets.
Prior to founding Lendable, Kissinger helped launch a consumer credit platform for Rocket Internet in Berlin. As the world has become more data-rich, managing consumer credit well has become “a technological problem,” he said. “You can apply machine learning and automation to all that data and do a much better job than the incumbents. You can offer better pricing, better transparency, better service, and you can do better underwriting.
Consumer credit is a nearly $3 billion addressable market in the UK and US, Lendable estimates. Covid-19 has accelerated the adoption of these products, and open banking in the US has helped fintechs by allowing third parties to use customer financial data to develop new services to drive competition.
Kissinger said the company has been profitable since 2017, but declined to disclose the group’s earnings.
Additional reporting by Josephine Cumbo in London