Australian Fund Led by Goldman and Bain Alums Buys Up US P2P Loans

global credit investments

Steven SherGlobal Credit Investments has called itself the first Australian fund to invest in peer-to-peer loans, according to The Sydney Morning Herald.  The small fund, set up by former Goldman Sachs banker Steven Sher and former Bain & Co consultant Gavin Solsky, is the latest of a new breed of financial intermediaries which has been buying loans American marketplace lenders Lending Club and Prosper.  In nearly a year, Sher and Solsky have built a portfolio approaching $10 million, with about 20 investors.

Global Credit Investments capitalises on major shifts in technology and innovative credit business models to invest in prime credit that provides investors high income returns and a strong focus on capital preservation without using financial engineering.

Gavin Solsky“Up until recently, these opportunities were closed to non-bank investors,” Solsky and Sher note on LinkedIn, “Our first fund aims to deliver investors 7-9% net returns without leverage, is geographically diverse and is not correlated with equities or real estate, significantly enhancing portfolio diversification.”

While Australian investors can lend via local marketplace lenders such as DirectMoney, Society One, RateSetter Australia and MoneyPlace, but they cannot loan money on offshore platforms explained The Sydney Morning Herald. GCI has made formal arrangements with these platforms that allows its systems to buy loans automatically based on parameters pre-set in GCI’s software.

Global Credit Investments“We are making an active decision on every loan that we buy. Lending Club and Prosper publish all of their data, so it is completely transparent. We can’t get the identity of the borrower, but we can get data on every payment that has been made on these loans, their [personal credit score], whether they own their house, have a mortgage, rent their house, how long they have been employed,” Solsky told The Sydney Morning Herald. “We have come up with our own algorithm, which says ‘Yes, we think the underwriting processes of these platforms is robust because they have been going for a long time, but we think we can cherry pick what we think are the best loans.’…You can go and invest in loans on Society One, but in a sense you are doing it somewhat blind. Is it the right asset class, the right platform, the right price? Have you thought about the possible downside?”

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