SocietyOne has a leadership team with both experience and a track record in this field. It has experienced some leadership changes in recent weeks, with one co-founder Matt Symons moving to non-executive director and the other Greg Symons moving to chief operating officer. Mitch Harad, chief marketing officer is leaving the company. Despite these changes, there is a lot of experience in the leadership team.
SocietyOne is backed by some substantive companies including Westpac’s venture capital fund Reinventure, NewsCorp and Australian Capital Equity. The company is in a period of substantial growth and has an expectation that it will have lent $200 million by calendar year end.
The company offers both personal and livestock loans: here we’ll focus on livestock. SocietyOne offers a lending facility to livestock agents for the purchase of stock. Repayment occurs in full to the investor after the sale of the livestock.
There are two particular advantages to this product over some other peer to peer lending products. One is the security of the loans made and the other is the term of the loans.
The security on each loan (in the livestock lending sector) is the livestock itself: a purchase money security over the livestock, amongst other agreements. In general circumstances, we can expect the secured asset to appreciate as it reaches maturity/sale.
The relatively short term nature of the loans (up to 18 months, on average nine months) reduces some risk borne by the investor as well. Some other products require the investor to hold the product for five years.
SocietyOne is offering rates of return between 8-10% on livestock lending. Currently, the platform is available to wholesale investors only and there is a minimum $25 000 investment. There is the possibility of adding retail clients to the platform in mid 2017.
What makes this offering quite different to other parts of the peer to peer market is that it may react differently to macroeconomic conditions compared to car loans, personal lending or mortgages. Whilst these loans will still be affected by a downturn in economic conditions, unlike some other offerings: the loans are secured on a commodity. These are also subject to price shocks (a shock like the halt in live exports, drought or disease are all possible), but it may be less correlated over the long term with general economic downturn than some of the other types of peer to peer lending. This hasn’t been proven: the platform and the concept is too new. But where we may expect an increase in car loan or mortgage defaults in a recession, short term livestock lending may be more robust.
This is not to say that this investment is risk-free: far from it. Acts of God and government still apply, but this is one factor that make the product both interesting and a useful way of diversifying a portfolio.
Company Name: SocietyOne
Product Name: Livestock Peer to Peer Lending
Advertised Rates: 8-10%
Advertised Term: Up to 18 months
Minimum Investment Conditions: Wholesale investors only, $25 000 minimum investment. Possible addition of retail clients mid 2017.
Best Features: Short term lending, agricultural loans, security on loan is a charge on the livestock itself.
Big Questions to Ask: Diversification across livestock agents: how many agents are using the system? What happens if they default on one loan, but have others in the system? What are the risks of stock loss?
Security Loans secured on livestock: the livestock should appreciate rather than depreciate.
Phone Number: 1300 221
Of note, SocietyOne won the Australian Retail Banking Awards 2016 “Best Digital Offering of the Year” Award and the FinTech Innovation in Lending (for Fintech) Award in 2016. The Australian Financial Review described SocietyOne as the “leading player” in marketplace lending.