ThinCats, DomaCom join forces on loan deals

ThinCats, DomaCom join forces on loan deals
financialobserver – 1 Aug 2016

Investment platform operator DomaCom and SME peer-to-peer lender ThinCats will collaborate to provide greater scope for exposure to property and loan opportunities.

In its announcement on Friday, DomaCom – soon to be listed as a crowdfunding service – said Australia’s peer-to-peer business lending sector had benefited from the tightening of bank lending to small to medium size enterprises (SMEs).

“Our link with ThinCats will give advisers the ability to sit on both sides of a property transaction by creating leveraged book builds,” said DomaCom chief executive Arthur Naoumidis.

“This also provides the 350 lenders on the ThinCats platform the opportunity to gain exposure to property assets and the ability to lend funds at an attractive interest rate with a lower risk profile.”

He added that when targeting growth instead of income, advisers using DomaCom would have to include debt in some book builds.

Echoing the sentiment about opportunity, ThinCats chief executive Sunil Aranha said that the link with DomaCom would “allow our lenders to gain exposure to both property and new loan opportunities”.

“Lenders on our platform are now providing more than $1 million in loans per month and DomaCom will lift our lending volumes even further,” Aranha said.

Loans would be lower risk and would have to be positively geared, Naoumidis said, with an initial loan to value ratio of no more than 50 per cent.

“The default rate for the fund borrowing the money is a low 3.5 per cent above the ANZ overnight cash rate – this currently equates to 5.25 per cent per annum,” he said.

“As the cost of the facility is 0.5 per cent of the loan amount, lenders will currently receive 4.75 per cent per annum – an attractive return in this low rate environment.”

He said investors were seeking a good yield without going too far up the risk curve, meaning there would likely be strong interest in the new facility.

“This is a wonderful illustration of true disruption, with a crowd funding platform and
peer-to-peer lending platform working together to enable [self-managed superannuation funds] to benefit from gains associated with property ownership whilst earning attractive fixed income returns,” Aranha added.