* Hedge fund Marshall Wace buys U.S. P2P firm Eaglewood
* To launch world's first listed P2P investment trust
* UK P2P industry seen worth 45 bln stg in a decade
(Adds quotes, background)
By Freya Berry
LONDON, April 25 A British hedge fund plans to
bring peer-to-peer (P2P) lending, hitherto at the fringes of
business financing, into the mainstream with the launch of a
fund that aims to attract wealthy institutional investors into
Marshall Wace, which manages about $15.5 billion of assets,
said on Friday it was buying U.S. P2P specialist Eaglewood
Capital Management for an undisclosed sum and the two firms
planned to launch the world's first listed P2P investment trust.
A source close to the matter said the trust would seek to
raise approximately 200 million pounds ($336 million) from
institutional investors, hoping to attract them to a small but
fast-growing and highly-profitable industry.
P2P loans allow investors to lend directly to individuals
and businesses, cutting out banks via low-cost online platforms.
The industry began its rise to prominence during the global
financial crisis, plugging the hole left by cash-strapped banks'
reluctance to lend to small businesses.
So far it has been dominated by small-scale, private loans
from individual retail investors. But that is set to change,
according to Simon Champ, a founder of brokerage Liberum Capital
and the chief executive of the new group's European arm.
"I saw the opportunity but recognised there wasn't a way for
institutional capital to get involved. It's an industry that has
grown so far with retail funding. And if it's going to live up
to its potential it will need institutional funding," he said.
Liberum has forecast P2P lending in Britain could be worth
45 billion pounds ($74 billion) within a decade, from less than
1 billion pounds now.
The industry - and its sister sector crowdfunding, which
allows individual investors to buy equity in new companies - has
already started the journey to the mainstream, attracting the
attention of larger firms and regulators alike.
Marshall Wace brought over Champ and his Liberum Capital
team last year to focus on opportunities in the industry.
And in 2013 the government launched a scheme to boost the
economy with the provision of 20 million pounds of small
business loans via P2P platform Funding Circle.
In a world of rock-bottom interest rates, P2P can offer
attractive returns - in exchange for the risks of lending to
small businesses that sometimes fail. The average net return
from investors in Funding Circle is 6.1 percent.
The P2P industry is also expanding its global footprint. UK
platform RateSetter recently opened in Australia, while in the
United States, Eaglewood completed the first ever securitisation
of P2P consumer loans in October last year, with a $53 million
transaction of loans made through U.S. P2P firm LendingClub.
And though the sector is still tiny, it has expanded
exponentially over the past five years.
"It's very much about creating something that's accessible
and easy to use," Champ said. "It's part of the same disruptive
internet technology that has shaken the high street, and it's
finally arrived at the door of the banks."
($1 = 0.5953 British Pounds)
(Editing by Clare Hutchison and Mark Potter)