UK P2P Lending

7/23/2019 UK P2P Lending

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dealing ahead of marketing communication. Please see important regulatory disclaimers and disclosures on page 15.

Tip of the iceberg

P2P Global Investments (P2PGI) is the first listed fund dedicated to

investing in platform-originated credit assets. Within 14 months of its

launch it raised an unprecedented 920m. In our view, this extraordinary

level of demand is a reflection of the great potential of this nascent asset

class and investors confidence in the managers position of strength.

Nascent asset class, bank disintermediation, both lender and borrower better off

Peer-to-peer (P2P) lending, where investors are lending to borrowers via platforms

that act as intermediaries, is a business model that emerged in 2005, enabled by

advances in financial technology. The model has started to take market share from

traditional lenders, having the competitive advantage of significantly lower costs,

which facilitate lower rates for borrowers and higher investment returns for lenders.

6%-8% target dividend, implied expected total returns of 10%+

P2PGI targets a dividend of 6-8% (on the issue price) and capital growth by leveraging

up (target 70-80% of NAV, or 40-45% LTV) platform-originated loans with targeted

annualised returns of 5-15%. The managers make the point the target dividend can be

met without leverage. However, leverage enables them to achieve the same returns

by investing in higher quality loans (i.e. with lower expected defaults). Investments in

platform equity stakes are a further and significant source of potential capital growth.

First mover advantage, position of strength

P2PGI has made the most of its first mover advantage, securing valuable capacity

deals with platforms, putting in place the technological infrastructure necessary to

process vast number of loans, developing a proprietary credit selection system (every

single loan is assessed individually) and quickly reaching impressive scale.

Granular portfolio, mostly US and Europe, 75% consumer, 11% average coupon

As at 30 June 2015, the 470m proceeds of the first two equity raisings were fully

invested in c.180,000 loans, originated on 15 platforms, mostly consumer and mainly

in US and Europe, with an average coupon of 11% and maturity of less than five years.

Company and portfolio key metrics, 30 June 2015

Net assets* (fully invested) 469.6m (221.0m in ords, 248.7m in C share)

Gearing 30-40% of NAV (target 70-80%, max 150%)

No of platform capacity agreements 15 (ranging in term from 5 years to evergreen)

No of individual loans (look-through) c.180,000

Weighted average coupon of loans 11%

Weighted avg maturity of loans Not disclosed, but at loan level max is 5 years

Equity or equity options (% NAV) In 10 platforms (3.14% ords / 2.47% C share)

Combined portf breakdown 31 Jul 2015 59% US consumer, 16% European Consumer,

11% European SME, 5% US SME, 1% Asia Consumer,

3% Equity, 6% Cash

*The C share class in existance at 30 June 2015 was converted in ordinary shares on 22 July 2015. A further 450m was raised

via a second C share class on 24 July 2015, currently trading under ticker P2P2 LN. Source: P2P Global Investments PLC

To watch: deployment, re-investments, defaults, cash cover, credit selection alpha

It is early days for the P2P lending sector and we look forward to more portfolio

disclosure and detailed performance attribution as track records are being built. In

particular, we would closely watch the gearing, dividend cover, defaults compared to

expectations and look for evidence of alpha creation via credit selection.

16 September 2015 | Investment Companies | Direct Lending Equity Research | UK

P2P Global Investments(LSE: P2P LN)

Price / NAV 1 048 / 1 009.5

Premium & 12m range (%) 3.8 (1.0 to 19.2)

Yield historic / est* (%) 4.4 / 6.3

Market cap (m, ords + C shares) 898.0

Objective: attractive income and capital growth

via alternative finance assets originated through

online platforms, primarily consumer & SME

loans and corporate trade receivables

Target dividend At least 6%-8% of issue price

Target returns Derived from loans with 5%-15%

expected returns + gearing

Listing / Domicile Main Market / UK

Company launch 29 May 2014

Investment Manager Eaglewood Capital

Key individuals Simon Champ, Abror Ismailov

Ann Management Fee 1% of net assets

Perf fee 15% of NAV returns with HWM

Gearing (Jul 2015) 30%-40% of NAV (max 150%)

NAV frequency Monthly

Dividend xd Jan, Apr, Jul, Oct

Dividend pay Feb, May, Aug, Nov

Continuation 2019 AGM and every 5yrs after

GBP TR 3m 6m 1yr

Since

launch

NAV 2.0 3.5 5.7 6.3

Price -1.3 -5.7 1.9 9.2

P2P Price (), NAV (), NAV + Dividends ( )

Source: Bloomberg. Data as of 14 September 2015

* yield estimate based on annualising the last full

quarter dividend (i.e. 66p = 16.5p x 4)

Monica Tepes, CFA

Investment Companies Analyst

[email protected]

950

1,000

1,050

1,100

1,150

1,200

950

1,000

1,050

1,100

1,150

1,200

May-14 Oct-14 Mar-15 Aug-15


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2 Cantor Fitzgerald Europe Research

P2P Global Investments| 16 September 2015 The P2P model

The P2P model

The P2P lending model

P2P lending is a direct lending concept whereby investors are lending to borrowers via

platforms (predominantly online) that act as intermediaries.

Another bank disintermediation story, this business model was originated in 2005,

driven by advances in financial technology, and has begun to take market share from

the more traditional lending operations of commercial banks.

The peer-to-peer (P2P) lending model - illustration

Source: Cantor Fitzgerald Europe Investment Companies Research

The platforms main competitive advantagesover traditional lenders are: Significantly lower operating and regulatory costs this allows the borrowers and

lenders to benefit from the cost savings (borrowers borrow at lower rates and

lenders can achieve better investment returns)

Offer direct access to loans the lenders select and buy/own the loans

Have greater flexibility to innovate

Average P2P net yields* vs. UK bank lending rates UK deposit and bond rates vs. average P2P net yields*

Source: P2P Global Investments PLC (Zopa, RateSetter, Funding Circle, Bank of England,

Bloomberg ). *All rates shown are as of January 2014 and based on 3 year loans for 5,000

Source: P2P Global Investments PLC (Zopa, RateSetter, MoneySupermarket

All rates shown are as of January 2014 and based on 3 year loans for 5,000

A nascent market, vast opportunity for growth

While the amounts lent via platforms have grown exponentially over the last few

years, in absolute terms, these loans still represent a small fraction of all outstanding

consumer and SME loans. BoE* puts the market size for SME loans at 171bn, with

only c.1% originated via online platforms. The US market is estimated by Harvard

Business School** at over $1tn, with less than 1 originated via online platforms.

LENDERS

(INVESTORS)

Individuals Individuals

SMEs Institutions

Funds

PLATFORMS

BORROWERS

Principal +

Interest

Funding

Originationfees Servicingfees

0%

2%

4%

6%

8%

10%

12%

14%

Zopa RateSetter Hitachi AA Nationwide Sainsbury's

0%

1%

2%

3%

4%

5%

6%

7%

UK bank

current

account

3yr UK BBB

corporate

bonds

UK bank 2yr

term deposit

5yr UK BBB

corporate

bonds

3yr Zopa P2P

loans

3yr

RateSetter

P2P loans

Funding

Circle P2P

loans

*Bank of England, September 2014

Harvard Business School The State of Small

Business Lending, September 2014


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Cantor Fitzgerald Europe Research 3

Platform asset classes P2P Global Investments| 16 September 2015

Platform asset classes

The concept of connecting borrowers and lenders via platforms is being applied to an

increasing range of products. However, the most developed offerings currently are in

the areas of consumer debt, SME debt and corporate invoice receivables, with leading

platforms in each of these areas seeing significant growth in recent years.

Consumer loans

The global P2P consumer loan business is a multi-billion dollar industry that matches

retail borrower members with retail and institutional capital at rates that are

competitive with those offered by traditional banks. As at 30 April 2015, total

consumer credit outstanding in the US stood at US$3.38tn (Source: US Federal

Reserve) and the EU market size for outstanding consumer debt was 566bn (Source:

European Central Bank).

The cost effective origination model operated by platforms allows certain consumersto borrow money at interest rates at which banks would generally not be able to cover

their cost base. For example, in the US, certain consumer borrowers have the

opportunity to obtain small loans of up to 5 year terms at interest rates below 6% p.a.

For lenders, consumer platforms offer net returns of 5% to 10% p.a., depending on the

risk profile of their loan selection.

Source: P2P Global Investments PLC

SME loans

The platforms operating in this asset class focus on connecting institutional and retail

capital to SMEs requiring debt finance. Generally, SMEs that are accepted as borrower

members are established businesses.

As at February 2015, the outstanding balance of loans to SMEs in the UK was 168bn

(Source: Bank of England). The emergence of P2P SME loan platforms in the UK, such

as Funding Circle (UK), allows creditworthy SMEs to borrow money online at interest

rates as low as 6% p.a. For lenders, the Funding Circle (UK) SME platform offers the

majority of investors net returns of 3.5% to 9% p.a.


Corporate invoice receivables

Invoice financing has emerged as a lending asset class whereby a platform advances

funds against invoice receivables. This form of financing allows businesses seekingworking capital to get advances on cash due from their customers.

From a borrower members perspective, this form of short-term (typically 30 to 180

days) financing provides for a low cost way for the business to receive capital instead

of an often more restrictive and/or more expensive banking facility. In many cases,

SMEs which sell goods or services to blue chip companies can receive advances

against their invoices via P2P platforms for an annualised discount factor of 8% to 20%

of the face value of the invoice.



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P2P Global Investments| 16 September 2015 The risks to returns

The risks to returns

P2P loans are generally held to maturity, so the upside is known at the time of

acquisition: at best the lender gets paid the interest due and their principal back. The

downside however depends on a number of factors, as detailed in the table below.

P2P model: main sources of risks to returns

General comments P2PGI specific comments

RISKS TO INVESTED PORTFOLIODefaults/losses

The risk portfolio losses exceed those expected. This can be due to:

factors outside the managers control (i.e. macroeconomic factors,

such as an overall increase in default rates) and/or

credit selection that results in a portfolio that experiences defaults in

excess of the broader market rates

Furthermore, it is difficult to: establish the reliability of the managers or the markets expected

default rates, given the limited availability of historical data

identify suitable benchmarks for the types of loans the managers

invest in, or even an overall benchmark for the investment universe

Platforms typically use multi-level credit and risk

rating models to assess the creditworthiness of

borrowers.

While some lenders acquire loans in bulk by relying

solely on the platforms credit assesment, P2PGI

has developed its own proprietary credit selectionmodel, which also uses additional third-party

data, and each loan is individually assessed.

Gearing

Gearing plays an important part in enhancing portfolio returns and

achieving attractive returns for shareholders. However, should a certain

rate of portfolio return not be achieved:

gearing detracts from shareholders returns and magnifies losses

if borrowing covenants are breached the manager may be forced to

sell loans and possibly do so at below market prices

if loans are prepaid, gearing may not be matched by invested assets

The Company is permitted to gear the portfolio up

to 150% of NAV (60% LTV) on a look-through basis.

The managers make the point the target dividend

can be met without leverage. However, the use of

leverage (target 70-80 if NAV) enables them to

achieve the same returns from a portfolio of higherquality loans(i.e. with lower expected defaults).

Platform going under

As loans are owned by the lenders and not by the platforms, a platformentering insolvency should not affect these investments. However, as

generally the platforms are also the servicers of the loans, the key here is

to quickly put in place a new loan servicing provider.

Platform due dilligence is a key area of focus forP2PGI. Furthermore, P2PGI has in place back-up

servicing agreements.

REINVESTMENT RISKMost loans have relatively short maturities. Furthermore, they do not havesignficant early redemption penalties or make whole clauses and can be

repaid with little or no notice.

The maximum permitted term of any of the P2PGIunderlying loans is five years.

Ability to secure future capacity

While the amount of money borrowed via platforms is growing rapidly,

the competition among platforms and lenders is also increasing.Being able to secure long-term capacity deals with platforms is

therefore essential to mitigating reinvestment risk.

P2PGI has to date sucessfully deployed, within

anticipated timeframes, nearly 500m.Furthermore, it has secured valuable capacity

agreements and has in place most favoured

nation agreementswith selected platforms.

Available rates/credits no longer attractive

This is dependent mostly on market conditions, although the

managers ability to secure/structure attractive deals is also important

Ability to secure future borrowings at economical rates

This is dependent mostly on market conditions, although the

managers ability to secure/structure attractive deals is also important

We understand from the Company that the cost of

borrowing secured by P2P loans is falling, as banks

are becoming more comfortable with the asset

class. It is also worth noting that the managers

pioneered the first P2P securitisation in 2013.

Regulation

Changes in regulation may impact the growth and dynamics of thesector and the returns that can be achieved

Source: Cantor Fitzgerald Europe Investment Companies Research


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Portfolio and performance P2P Global Investments| 16 September 2015

Portfolio and performance

Portfolio

AS of 30 June 2015 the ordinary share portfolio was fully invested in c.180,000 loans,

originated via 15 platforms, with a weighted average coupon of 11 .We understand

gearing stood at around 30 -40 of NAV.

P2P Ordinary Share portfolio breakdown (467.6m NAV), 31 July 2015 P2P C Share portfolio breakdown (395.6m NAV), 31 July 2015

Source: P2P Global Investments PLC Source: P2P Global Investments PLC

P2P top ten positions (as per C share prospectus published on 30 June 2015)

Investment Country Principal activity Value () % NAV

1 Eaglewood SPV1 LP US Alternative finance SPV (holds tens of thousands of loans) 302,369,530 64.15

2 P2PCL UK Alternative finance SPV 8,232,118 1.75

3 Ratesetter Equity UK P2P Lending Platform 2,400,003 0.514 Zopa Equity UK P2P Lending Platform 2,272,737 0.48

5 Direct Money Equity UK P2P Lending Platform 1,203,536 0.26

6 Lending Works Equity UK P2P Lending Platform 958,228 0.20

7 SME Loan UK Consumer Services 260,420 0.06

8 SME Loan UK Healthcare 260,420 0.06

9 SME Loan UK Manufacturing and Engineering 257,003 0.06

10 SME Loan UK Leisure & Hospitality 248,141 0.06

Total 318,462,136 68.00


Performance* (*past performance is not necessarily an indication of future returns)

P2P NAV total returns (%) P2P price, NAV, NAV + dividends (p)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD ITD

2014 0.16 0.17 0.22 0.23 0.48 0.54 0.50 2.32

2015 0.54 0.59 0.64 0.41 0.71 0.77 0.50 4.24 6.66

P2P dividends per share (p)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD ITD

2014 6.0 6.0

2015 12.5 16.5 10.5 * 45.5

ITD = inception to date. Inception = 29 May 2014

*8.5p per share was declared to the original C Shareholders prior to conversion

**The initial IPO proceeds wer fully delpoyed within 8 months, within the 6-9 months targer set at IPO


Source: Bloomberg, P2P Global Investments PLC

European

Consumer

15.6%

European SME

10.5%

US Consumer

59.0%

US SME

4.8% Asia Consumer

1.4%Equity

2.8%

Cash & Money

Market

5.8%

Cash and

Money Market

100.0%

950

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950

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1,100

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May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15

NAV + Dividends

Price

NAV

200m IPO proceeds

fully deployed**

250m C

share raised

450m Cshare raised


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P2P Global Investments| 16 September 2015 Platform agreements

Platform agreements

P2PGI, directly and indirectly, has in place capacity agreements with a number of

platforms. They give the Company the right (but not the obligation) to buy a

pre-determined volume of loans originated by these platforms. These agreements are

valuable, as the reinvestment risk of the asset class is relatively high, given the

relatively short maturities of the underlying loans.

The length of these agreements varies; we understand from the Company they range

from five years to evergreen. They are subject to termination on the occurrence of

certain events, which usually include the event where P2PGI and/or its affiliates do not

invest a minimum amount during a given time period (generally one year).

Descriptions of some of the established platforms in the US, UK and New Zealand through which the Company currently invests

Lending Club (US)

Lending Club is a US-based platform for consumer lending that was established in 2007. It is the largest P2P loan platform globally, in

terms of volume of loan origination, with loan origination over US$9.2bn from launch and current quarterly origination reachingapproximately US$1.6bn (as of March 2015). Lending Club currently offers lender members average net annualised returns of 5.0% to

9.7%, depending on credit grade (after fees and default losses) on their 3 to 5 year fully amortising loans with (across both 3 and 5 year

loans) annualised lifetime default rates of 2% to 14%. (Source: www.lendingclub.com).

Upstart (US)

Launched in April 2012 by ex. Google employees, Upstart offers unsecured loans ranging from $3,000 to $35,000 to consumers,including those with shorter credit history (thin file applicants) who, based on Upstarts underwriting and risk assessment process,

are able to demonstrate potential for future income earnings based on their education and work experience. Upstart currently offers

lender members average net annualised returns of 5.1% to 8.4% (after fees and default losses), depending on credit grade. (Source:

www.upstart.com).

Prosper (US)

Founded in 2005, Prosper is the second largest consumer platform in the US, with more than two million members and over $3bn in

funded loans. Borrower members list unsecured loan requests between $2,000 and $35,000. The average expected annualised netyield (after fees) is 6.87%. (Source: www.prosper.com).

Funding Circle (UK)

Launched in 2010, Funding Circle (UK) was the first, and is now the leading, P2P SME platform in the UK and globally in terms of

volume of loan origination. The platform has originated over 682m of loans since inception. The loans have been funded by lenders

including retail lenders, county councils, the Government-backed British Finance Partnership (20m lent from March 2013) and the

Government-backed British Business Bank, who have committed to lend 40m from its 300m investment programme. The platformoperates using a floored auction rate model which has achieved net annualised returns to lenders of 6.6%, since inception, and which

has a current expected lifetime bad debt rate of 4.2%. Funding Circle (UK) currently offers loans with terms up to 5 years to UK-based

established SMEs. (Source: www.fundingcircle.com/uk).

Zopa (UK)

Zopa, founded in 2005, was the first P2P platform worldwide and is currently the largest platform in the UK with over 907m in

origination since inception. Its business focuses on matching high credit quality consumer borrower members in search of 1 to 5 yearterm loans with lender members, who can earn a current expected annualised net yield (after fees) of 5.0%. Loans originated through

the platform since 2011 have an historic lifetime overall default loss rate of not more than 0.96%. (Source: www.zopa.com).

RateSetter (UK)

Founded in 2010, the business has emerged as one of the leading UK consumer platforms, having originated over 671m since launch.

The current average expected annualised net yield (after fees) is 5.5% and 6.6% on 3 and 5 year loans respectively. Over the full term,

RateSetter expects the bad debt rate on outstanding loans to be approximately 1.4%. (Source: www.ratesetter.com).

Harmoney (NZ)

Launched in 2014, Harmoney is New Zealands first licensed peer to peer lending platform. Harmoney has originated over NZ$50

million in consumer loans over 8 months and was forecasted to generate annualised returns of 12% on deployed capital. The loans have

been funded by individuals and several major institutional investors. Its business focuses on loans to creditworthy individuals of

NZ$1,000 NZ$35,000 with terms of 36 and 60 months. (Source:www.harmoney.co.nz).



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Investment management process P2P Global Investments| 16 September 2015

Investment management process

The Investment Managers investment strategy and risk management policy can be

broadly split into three stages, as follows.

1) Platform due diligence and on boarding

Prior to investing in any credit assets through a platform, the Investment Manager will

engage in a thorough due diligence process to ensure that the platform has

appropriate expertise and the necessary operational systems in place. A commercial

and financial assessment will be undertaken in order to examine:

1.

the platforms ability to do business in its markets for the foreseeable future;

2.

the soundness of its financial planning;

3.

its ability to manage regulatory and business risks; and

4.

the robustness of its outsourcing to third party agencies to continue servicing loans

in the event of that platforms insolvency.

The Investment Manager automates, as far as possible, all information gathering,

documentation and reconciliation processes, and has in place direct access to the

platforms data.

2) Capital allocation and asset selection

The Investment Manager considers, across a broad spectrum of platforms, the relative

merits of different asset classes, taking into account factors such as gross interest

rates, expected default loss rates, market capacity and leverage considerations.

Expected default loss rates are derived from the Investment Managers analysis of

historical payment data, where available.

The Investment Manager allocates assets using its proprietary asset selection

modelswhich use platform data but also third-party datafor credit analytics. These

models seek to identify individual assets within each platform credit grade with

superior risk/reward ratios, by analysing parameters such as default risk, duration,

geography and asset class at the marketplace and aggregate portfolio level. The

Investment Manager back-tests the performance of historical loan parameters to

assess their outperformance against passive investing.

3) Portfolio and risk monitoring

The Investment Manager has in place risk management processes designed to limit the

impact of unforeseen shocks and maintain the required diversification (see page 11).

These portfolio monitoring tools also allow the Investment Manager to drill down into

sub-categories and conduct scenario analysisof future positions. For assets that have

attained around 30% of their scheduled maturity, the Investment Manager regularly

compares realised static pool losses against initial expected losses. The Investment

Manager also regularly monitors the correlation between default loss rates from

different asset classes.

Technology, infrastructure, operations

Additionally, the Investment Manager places great emphasis on the robustness of its

operations and infrastructure. Given the vast amounts of loans being processed

(currently there are c.180,000 loans in the portfolio and we understand that millions ofloans are being assessed) the Investment Manager has in place technology designed

for straight-through loan processing, with front-office and middle-office processes

automated to manage scale.

The Investment Manager has undertaken

substantial research into historical loss ratesacross each of the platforms via which it invests

in order to extrapolate forecasted default losses.

In its analysis, the Investment Manager considers

fully matured loans and loans that have sufficient

performance history to extrapolate expected

lifetime of loan defaults based on default curves


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P2P Global Investments| 16 September 2015 The Investment Manager

The Investment Manager

The Company's investment manager is Eaglewood EuropeLLP, a London based asset

manager specialising in the alternative credit space. Eaglewood Europe was incubated

out of the London-based investment bank Liberum Capital before being acquired by

Marshall Wace in 2013. In 2014 it merged with Eaglewood Capital Management LLC, a

SEC-registered investment advisor based in New York, founded in 2011, to form MW

Eaglewood.

The Investment Manager has delegated certain of its responsibilities and functions,

including its discretionary management of the Company's portfolio to Eaglewood

Capital. Eaglewood Capital has been at the forefront of developments in the emerging

online direct lending space, including the first securitisation of P2P consumer loans in

October 2013.

The team at Eaglewood Capital is comprised of 24 individuals, 13 based in London and

11 based in New York.

The team includes seven credit professionals, a risk officer, a COO, two legal

professionals, four IT professionals, one accounting professional and two operations

executives.

Key individuals

Simon Champ, Chief Executive Officer, Eaglewood Europe

Simon Champ has nineteen years experience in banking as a Director of Equity Sales

and Equity Capital Markets at Dresdner Kleinwort, JP Morgan Cazenove and most

recently Liberum. As a founder and former board Director of Liberum, he was part of a

number of innovative transactions in the equity space and has advised many new

technology companies in equity and debt raisings. He has been involved in the UK P2Pindustry as both an investor and advisor and has built extensive relationships with

many of the leading P2P platforms. He has been seconded from Eaglewood Europe to

the Investment Manager.

Abror Ismailov, Portfolio Manager, Eaglewood Europe

Abror Ismailov is a portfolio manager with responsibility for managing the Companys

assets. Prior to joining the Investment Manager, he worked as a Director within

Lazards Structured Credit Advisory group, was a Senior Portfolio Manager for Union

Investment in Frankfurt, a Portfolio Manager at Cambridge Place Investment

Management and held various positions within the Global Portfolio Management

Group at Deutsche Bank. In these roles he has been responsible for managing over

3.5bn of funds invested in structured credit, real estate and private equity

investments. He holds Masters degrees in Business and Finance from the University ofHamburg, University of Nantes and University of Valencia and is a CFA charterholder.

Steven Lee, Chief Investment Officer, Eaglewood Capital

Steven Lee is a portfolio manager with responsibility for managing the Company's

assets. Prior to joining Eaglewood, he worked for Cambridge Place Investment

Management, a London-based hedge fund, as the Global Head of Credit Research.

Prior to Cambridge Place Investment Management, he worked as a Director for UBS in

Zrich in cash and collateral trading and as a research analyst at Fidelity Investments

focused on ABS and corporate debt. He has also worked for Prudential and Coopers &

Lybrand. He has over 20 years of fixed income investment experience and has

invested across several ABS sectors, both in the United States and in Europe. He

graduated with an M.B.A. from the University of Chicago, a BS from Binghamton

University and is a CFA charterholder.


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The Board of Directors P2P Global Investments| 16 September 2015

The Board of Directors

The Companys Board is comprised of three non-executive directors, all of whom are

independent of the Investment Manager.

Stuart Cruickshank (Chairman) (aged 60)

Stuart Cruickshank is an established financial professional with public company and

Whitehall experience. He has worked for large, blue chip organisations such as Diageo,

Whitbread and Kingfisher and he has also spent a number of years in SMEs. His sector

exposure is wide and includes financial services, fast moving consumer goods,

business to business, mass retailing, technology and entertainment. He has experience

of investor relations on both sides of the Atlantic and in Continental Europe. His last

executive role was Director General and Chief Finance Officer of HM Revenue &

Customs. He has a number of non-executive roles. He chairs the Audit Committee and

is the Vice Chairman of Cambridge Building Society and is the Chair for the BMA Audit

Committee. He took InternetQ Plc through the AIM admission process and chaired theorganisation through the early stages of its life as a public company. He has previously

held non-executive positions in the healthcare sector as well as with the technology

company, Psion Plc.

Simon King (aged 49)

Simon King has many years of experience of managing investment companies and

trusts. He joined Gartmore Fund Managers in 1994, initially working on the UK Smaller

Companies team where he took charge of the NatWest Smaller Companies Exempt

fund, the UK Emerging Companies Strategy fund and a selection of specialist pension

fund products. In 2000 he became a senior investment manager on Gartmore's UK

Equities team. He managed and co-managed a series of funds including the Gartmore

UK Focus Fund, the Alphagen Avior Hedge Fund and the Alphagen Octanis Hedge

Fund. From 2009 to 2012, Simon worked at Premier Asset Management where he

managed UK unit trusts. He is currently a part time Senior Fund Manager at Numis

Asset Management. He holds a degree in Economics from Surrey University. He brings

to the Board a wealth of experience in the areas of fund management, regulation and

adherence to investment mandates.

Michael Cassidy (aged 67)

Michael Cassidy has had over 40 years experience as a qualified lawyer, principally

engaged in investment work for a large pension fund and most recently as a

consultant to DLA Piper. He had a career in City Local Government, with senior roles

at Guildhall including Leader of the Council and Planning Chairman, and also theMuseum of London and Property Investment Board. He has also been non-executive

director of British Land and is currently senior non-executive director at Crossrail and

non-executive director of UBS Ltd. He is also the Chairman of Ebbsfleet Urban

Development Corporation and was awarded CBE in 2004 for services to the City of

London.


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P2P Global Investments| 16 September 2015 About the Company

About the Company

P2P Global Investments PLC is the first UK listed company dedicated to investing in

credit assets originated via online lending platforms globally. The Company is UK-

domiciled and is subject to Investment Trust tax treatment.

The Company was launched on the Main Market of the London Stock Exchange on 29

May 2014 and to date has raised over 920m via multiple issues.

P2PGI equity raisings, 31 August 2015

Date m raised Issue type Notes

29 May 2014 200.0 Initial fund raise IPO price 1,000p

27 Jan 2015 250.0 C Share Converted* on 22 July 2015

18 Jun 2015 21.5 Tap issue Issued at 1,075p

24 Jul 2015 450.0 C share Currently trading as a C share (P2P2 LN)

Total 921.5

*C Shares get converted to ordinary shares once over 90% of proceeds have been invested


Investment objective

The Companys investment objective is to provide Shareholders with an attractive

level of dividend income and capital growth through exposure to investments in

alternative finance and related instruments.

Target returns

The Company does not have a defined total return target, but will typically seek to

invest in Credit Assets with targeted net annualised returns of 5 to 15 .These are

unlevered returns at the individual asset level, before expected defaults, costs and the

impact of leverage.

Target dividend

The Company targets an annualised dividend yield of at least 6 to 8 of the issue

price, i.e. 60p 80p per share. Dividends are paid quarterly.

Investment Policy

The Company invests in consumer loans, SME loans, corporate loans, and advances

and loans against corporate trade receivables and other assets, which have been

originated via platforms.

The Company may also invest in facilities, securities or other interests backed by a

portfolio of any of the aforementioned loans, assets or receivables.

Platformsmeans origination platforms that allow non-bank capital to:

a) lend or advance capital to consumers, SME borrowers or corporate borrowers;

and/or

b)advance capital against corporate trade receivables

The Company may also invest, in aggregate, up to 10 of Gross Assets (at the time of

investment) in the listed or unlisted equity and equity-linked securities issued by

platforms.

Dividend and capital growth

Consumer loans, SME loans, trade receivables

originated via platforms

Up to 10% in platform equity stakes

Primarily US and Europe, but global remit


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About the Company P2P Global Investments| 16 September 2015

Investment restrictions

Maximum 33 of gross assets may be invested via any single platform. This may

be increased to 66%, provided that this amount is not greater than 25% of the total

loans originated by that platform in the previous calendar year.

Maximum 20 of gross assets, at the time of investment, may be invested in any

single fund investing in credit assets. A maximum of 60%, in aggregate, at the time

of investment, may be invested in such funds.

Maximum 10 of gross assets may be invested, at the time of investment, in other

listed closed-ended investment funds, whether managed by the Investment

Manager or not. However, this restriction shall not apply to funds which themselves

have stated investment policies to invest no more than 15% of their gross assets in

other listed closed-ended investment funds.

Maximum 10 of gross assets, at the time of investment, may be invested in the listed

or unlisted securities issued by one or more platforms . This restriction shall not

apply to any consideration paid by the Company for the issue to it of any convertiblesecurities by a platform. However, it will apply to any consideration payable by the

Company at the time of exercise of any such convertible securities or any warrants

issued by a platform. The Company does not currently intend to invest more than 5%

of gross assets in securities issued by platforms, however, the 10% limit gives the

Company room to crystallise its investment in such options and warrants.

The following will apply, at the time of investment by the Company, to credit assets

acquired by the Company directly and on a look-through basis, as a percentage of

gross assets:

Maximum 0.25% in any single consumer loan

Maximum 5% in any single SME loan

Maximum 5% in any single advance or loan against a trade receivable asset

Maximum 5% in any single corporate loan

Maximum 20% in any single facility, security or other interest backed by a portfolio

of loans, assets or receivables (excluding any borrowing ringfenced within any SPV

which would be without recourse to the Company)

Maximum 50% will be invested in SME credit assets

Maximum 50% will be invested in trade receivable assets

Minimum 10% will be invested in consumer credit assets

Minimum 10% will be invested in Europe and minimum 10% in the United States

The expected average life of any single loan will not exceed 5 years . Expected

Average Life means the expected weighted average time for the receipt of principal

payments.

Any single trade receivable assetwill be for a term of nolonger than 180 days.

The Company will not invest in CDOs.

The Company may invest in cash, cash equivalents and fixed income instruments for

cash management purposes and with a view to enhancing returns to Shareholders or

mitigating credit exposure. However, the Company will only invest in fixed income

instruments of investment grade.


12/15



The Investment Manager

The Company's investment manager is Eaglewood EuropeLLP, a London based asset

manager specialising in the alternative credit space and a subsidiary of Marshall Wace

LLP. For more details and key individuals see page 8.

Investment strategy and process

See page 7.

Fees

1% of NAV annual management fee

A management fee is payable monthly in arrears at a rate of 1/12 of 1.0% per month

of Net Asset Value.

Performance fee of 15% of NAV gains

The Investment Manager is entitled to a performance fee equal to 15% of gains in the

Adjusted Net Asset Value, calculated on a yearly basis and subject to a High Water

Mark.

Adjusted Net Value means the Net Asset Value adjusted:

for any increases or decreases in NAV arising from issues or repurchases of shares

by adding back the aggregate amount of any dividends or distributions

by adding back any accrued performance fees

to ensure no double charging of fees (see paragraph below).

No double charging of fees

The Investment Manager does not charge a management fee or performance fee

twice. The value of investments where a fee is charged by the Investment Manager or

any of its affiliates is therefore excluded from the NAV calculation for the purposes of

determining the fee payable.

Loan administration fees (0.025% of NAV)

The Company has appointed Deutsche Bank AG, London Branch as Loan

Administrator to provide loan administration services. The Loan Administrator is

entitled to receive a fee of 0.025% of Net Asset Value, subject to a minimum monthly

fee of 2,000 (exclusive of VAT), for the provision of loan administration services.

Borrowing policy

Borrowings may be employed at the level of the Company and at the level of any

investee entity. The aggregate leverage, on a look-through basis, is limited to 1.5times Net Asset Value.

The Company may seek to securitise portfolios of Credit Assets and may establish one

or more SPVs in connection with any such securitisation.

We understand that leverage costs are falling compared to early facilities, as banks

become more comfortable with the asset class.

The Manager makes the point the target dividend can be met without leverage.

However, the use of leverage (target is 70 -80 of NAV) enables the Manager to

achieve the same returns from a portfolio of higher quality loans (i.e. with lower

expected defaults).


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About the Company P2P Global Investments| 16 September 2015

Hedging policy

The Company intends to hedge currency exposurebetween Sterling and any other

currency in which the Companys assets may be denominated, including US Dollars

and Euros.

The Company does not intend to hedge interest rate riskon a regular basis. However,

where it enters floating-rate liabilities against fixed-rate loans, it may at its sole

discretion seek to hedge out the interest rate exposure, taking into consideration

amongst other things the cost of hedging and the general interest rate environment.

Net Asset Value

The Net Asset Value (cum-income and ex. income) is calculated by the Administrator

on the basis of information provided by the Investment Manager and / or the External

Valuer on a monthly basis.

Loans valuation

At acquisition, loans are valued at the initial advance amount inclusive of any fees paid

to the platforms or, if acquired from a third party, at the purchase consideration paid.

Thereafter, all loans are valued at this amount less cumulative amortisation calculated

using the Effective Interest Rate (EIR) method. The EIR method spreads the

expected net income from a loan over its expected life. The EIR is that rate of interest

which, at inception, exactly discounts the future cash payments and receipts from the

loan to the initial carrying amount.

Adjustment for impairments

Loans advanced will be assessed by the Investment Manager for indications of

impairment during and at the end of each reporting period. Evidence of impairment

includes:

1.

significant financial difficulty of the platform;

2.

breach of contract, such as default or delinquency in interest or principal payments;

3.

probability that a borrower will enter bankruptcy or financial reorganisation.

In the event of payment arrears, the outstanding amount of the loan is adjusted as

follows:

Payment late by Impairment applied

Up to 15 days 0%

15 30 days 40%

30 60 days 60%

60 90 days 80%

Over 90 days 100%


Loans advanced will be further assessed for impairment on a collective basis even

if they are assessed not to be impaired individually. Observable changes in economic

conditions or changes in forecasted default or delinquency in interest or principal

payments based on the Investment Managers past experience will be applied.

Fair value accounting for liquid credit assets

In the event that a liquid secondary market or exchange in credit assets is established

and the Company elects to buy and sell credit assets via this exchange, the Company

may adopt a fair value accounting methodology.

Unlisted equity valuationInvestments in unlisted equity will be valued at costs less accumulated impairment

loss as determined by the Investment Manager.


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Dividend policy

The Company intends to distribute at least 85 of its distributable incomeearned in

each financial year by way of dividends.

The Company intends to pay dividends on a quarterlybasis with dividends declared inDecember, March, June and September and paid in February, May, August and

November in each year.

The Company targets an annualised dividend yield of at least 6 to 8 of issue price

(i.e. 60p to 80p per share).

It is the intention of the Board to move towards a policy of balancing the quarterly

dividend payments as soon as the revenue reserve position of the Company permits

this approach.

Dividend history

Dividend payments (pence per P2P share)

Financial

year

In respect of Amount Declared Xd Date Pay date

2014IPO to 31 Sep 6.0 18 Nov 2014 27 Nov 2014 30 Dec 2014

Q4 12.5 20 Feb 2015 5 Mar 2015 2 Apr 2015

2015Q1 16.5 19 May 2015 28 May 2015 26 Jun 2015

31 Mar to 31 May 10.5 30 Jun 2015 9 Jul 2015 7 Aug 2015


Company life & continuation votes

The Company has no fixed life; however, an ordinary resolution for the continuation of

the Company will be proposed at the annual general meeting of the Company to beheld in 2019 and, if passed, every five years thereafter.

Significant shareholders

P2P large shareholders (as at 14 September 2015)

Shareholder %

1 Woodford Investment Management 13.9

2 Invesco Ltd 8.7

3 Thesis Investment Management 3.4

4 AXA 3.2

5 Ruffer Investment Management 2.3

6 Artermis Investment Management 2.2

7 JO Hambro Capital 2.18 M&G Investment Management 2.1

9 Aviva Investors 1.4

10 Legal & General Investment Management 1.2

Total 40.5

Source: Bloomberg

Important dates

Financial year end: 31 December

Dividends declared: Dec, March, June, Sept

Dividends xd dates: Jan, April, July, Oct

Dividends pay dates: Feb, May, Aug, Nov

Continuation votes: 2019 AGM and every five years thereafter


15/15

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UK P2P Lending

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