The Ontario Teachers’ Pension Plan has led a £210m funding round in British fintech group Lendable as Canada’s largest single-professional pension fund deepens its foray into private markets.
Founded in 2014 and headquartered in London, Lendable has built a technology platform to connect global institutional investors with borrowers across loans, credit cards and auto finance. The new fundraising round values Lendable at £3.5bn, up from last year when shares worth over £1bn were sold.
Ontario Teachers’ investment comes at a time when asset allocators are rushing into private markets over concerns that future returns from publicly traded assets will be limited after a strong rally in recent years. As early as 2022, tech stocks have tumbled as traders brace for central banks to tighten monetary policy.
The CA$227.7 billion fund made the investment through its Teachers’ Innovation Platform, which launched nearly three years ago to focus on late-stage venture and growth equity in tech companies in the US, Europe and Asia with ticket sizes ranging from 50 to 100 US dollars to focus million and $250 million. The new platform reflected the pension plan’s desire to diversify its investments and seek yield.
Morgan Stanley has estimated that growth stocks are the fastest growing part of the private capital world. Growth equity typically finances well-established, but still younger, fast-growing private companies in exchange for minority equity investments.
Avid Larizadeh Duggan, Managing Director of Ontario Teachers’ Innovation Platform, joined last year to expand their presence in Europe. She said, “It’s long-term capital and we select our investments with the long-term perspective of staying with these entrepreneurs and companies.” She said Ontario Teachers, unlike typical venture capitalists, who get out when an investment goes public , “may have the ability to be crossover investors when these companies go public”.
Larizadeh-Duggan said Ontario Teachers’ goal is to increase its investment in high-growth companies from $5.7 billion to $20-25 billion over the next five years, in line with the growth of the broader program. Other UK investments include Beamery, a talent management platform; ComplyAdvantage, an anti-money laundering technology company; and Graphcore, a semiconductor company developing AI and machine learning accelerators.
Other large wealth managers are also pushing into private markets in the region. AustralianSuper, the country’s largest pension scheme, said in February it plans to invest £23 billion in the UK and Europe over the next five years as it makes investments in property, infrastructure and personal credit. Caisse de dépôt et placement du Québec, another major Canadian pension plan, plans to invest £9 billion in UK and European private wealth.
Martin Kissinger, Lendable’s founder and CEO, said the latest round of funding will help “accelerate growth” both in existing markets and in the US, where the company opened an office last year. He said Lendable will eventually look to add new products in areas like “buy now, pay later” and expand into new markets.
Before founding Lendable, Kissinger helped launch a consumer finance platform for Rocket Internet in Berlin. As the world has gotten richer in data, good consumer finance has become “a technology problem,” he said. “They can apply machine learning and automation to all that data and do a much better job than the incumbents. They can offer better rates, more transparency, better service and better underwriting.”
Consumer credit is a nearly $3 trillion addressable market in the UK and US, Lendable estimates. Covid-19 accelerated the adoption of these products and open banking in the US has helped fintechs by allowing third parties to use customers’ financial data to develop new services, thereby increasing competition.
Kissinger said the company has been profitable since 2017 but declined to disclose the group’s earnings.
Additional reporting by Josephine Cumbo in London