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  • Universit Bocconi28 November 2016

    Roberto CondulmariEdoardo Matarrese

  • 2www.P2PLendingItalia.com

    WHY SHOULD TRADITIONAL ASSET

    MANAGERS BE INTERESTED IN P2P LENDING ?

  • THE T.I.N.A. GAME

    3www.P2PLendingItalia.com

    Source:ExaneBNPParibas estimates basedonBloomberg dataasof24Nov2016,P2PLendingItalia.com

    T.I.N.A. There Is No Alternative seems to be the investment strategy du jourSantiago Lpez Daz Exane BNP Paribas

    DURATION OF NEGATIVE YIELDING BONDS (NUMBERS OF YEARS) - RED (NEGATIVE) / GREEN (POSITIVE)

    BondDuration (#ofyears)

    Country 1 2 3 4 5 6 7 8 9 10 15 30

    Switzerland

    Japan

    Germany

    Netherlands

    Austria

    Denmark

    Belgium

    France

    Sweden

    Finland

    Spain

    Italy

    UK

    USA

  • CBs HAVE DIVIDED INVESTORS...

    4www.P2PLendingItalia.com

    Source:Epsilon Theory W.BenHunt,Ph.D.,CompassAM

    There are ZERO income seekers holding negative rate bondsW. Ben Hunt, PH.D. Salient Partners

    Short-term owners

    RETURN SEEKERS

    Sticky owners

    INCOME SEEKERS

    Central Banks balance sheet expansion and imposition of negative rates are great if you are a return seeker; thats terrible, however, if you are an investor looking for income from your portfolio...

  • ALTERNATIVE CREDIT A NEW ASSET CLASS (i)

    5www.P2PLendingItalia.com

    Source:ExaneBNPParibas estimates Sept2016,DeutscheBundesbank, P2PLendingItalia.com

    If credit were like any other good, one would expect that if prices increase in line with risk there should still be actors willing to provide it. However [...] even banks with a clear legal mandate to accept

    all customers [...] are not willing to provide credit to this slice of the market.

    Deutsche Bundesbank Discussion Paper: How does P2P Lending fit into the consumer credit market?

    Born in the A.C. After Crisis (i.e. post 2008) era from the gradual, unstoppable, fragmentation/dissolution of traditional banking models...

    HOW MUCH CAPITAL IS ENOUGH? - TOTAL ASSETS / TOTAL EQUITY OF SPANISH BANKS:

  • ALTERNATIVE CREDIT A NEW ASSET CLASS (ii)

    6www.P2PLendingItalia.com

    Current relative advantages:

    i. Not distorted

    ii. High premium vs Government bond yields

    iii. Can be securitised

    iv. Generally (still) not crowded

    v. Can be supported by collateral guarantee

    And disadvantages:

    i. Illiquid / less liquid

    ii. Requires a lot of bottom up analysis effort

    ALTERNATIVECREDIT

  • WHERE SHOULD WE FOCUS?

    7www.P2PLendingItalia.com

    i. Invoice purchasingii. Personal loansiii. Collateralized direct loansiv. SME loansv. Etc

    DIRECTLOANS

    STRUCTURAL

    GLOBAL

    SEGMENTED

  • GLOBAL PICTURE - VOLUMES

    8www.P2PLendingItalia.com

    Source:University ofCambridge,KPMG:The2ndEuropean AlternativeFinance IndustryReport - Sep.2016;P2PLendingItalica.com

    1,13 2,835,433,24

    9,65

    33,58

    4,13

    20,29

    94,61

    0

    20

    40

    60

    80

    100

    2013 2014 2015

    ONLINE ALTERNATIVE FINANCE VOLUMES 2013-2015 ( BN)

    Europe (inc. UK) Americas (inc. US) Asia-Pacific (inc. China)

  • EUROPE VOLUMES

    9www.P2PLendingItalia.com

    Source:University ofCambridge,KPMG:The2ndEuropean AlternativeFinance IndustryReport - Sep.2016;P2PLendingItalica.com

    4348

    319 24950 32

    0

    1000

    2000

    3000

    4000

    5000

    UK France Germany Spain Italy

    ONLINE ALTERNATIVE FINANCE VOLUME BY COUNTRY 2015 (MLN)

  • THE UK ECOSYSTEM

    10www.P2PLendingItalia.com

    ONLINE LENDING ECOSYSTEM

    Consumer Lending

    Business Lending

    Secured Lending

    Invoice Financing

    Source:OrchardPlatform

  • INSTITUTIONAL MONEY vs RETAIL MONEY

    11www.P2PLendingItalia.com

    Source:Funding Circle,AltFiData,P2PLendingItalica.com

    WHAT HAPPENS WHEN A SINGLE INVESTOR WANTS TO DEPLOY 100M THROUGH A PLATFORM ?

    Originally it was Peer-to-Peer lending (Bob lending to Peter), but importantly with institutional investors looking for yields, major P2P platforms morphed into Marketplaces. MPLs will become most likely a replica of the traditional stock exchange model for this new asset class.

    Like in the stock exchange, the vast majority of volumes are deployed by institutions. The US is already clearly evolving in this direction, with 80%+ of lending volumes now coming from institutions:

    0%10%20%30%40%50%60%70%80%90%

    100%

    US Market UK (Funding Circle)

    Retail Institutional

    80%+ 50%+

  • PER CAPITA VOLUMES ITALY vs EUROPE

    12www.P2PLendingItalia.com

    Source:University ofCambridge,KPMG:The2ndEuropean AlternativeFinance IndustryReport - Sep.2016;P2PLendingItalica.com

    65,9

    4,8 3,1 1,1 0,50

    10

    20

    30

    40

    50

    60

    70

    80

    UK France Germany Spain Italy

    MARKET VOLUME PER CAPITA BY COUNTRY 2015 ()

  • THE ITALIAN ECOSYSTEM

    13www.P2PLendingItalia.com

  • OUR VIEW...

    14www.P2PLendingItalia.com

    ONLINE DIRECT LENDING IS A GLOBAL PHENOMENON

    TRENDS ARE POWERFUL ... IN SPITE OF POSSIBLE STOPs AND GOs

    UK AND US ARE MUCH AHEAD: IT SEEMS AS IF THEY ARE IN A TIME MACHINE PROJECTING THEM 510

    YEARS IN THE FUTURE vs EUROPE

    WE EXPECT CONTINUED EVIDENCE OF ASSET MANAGERS MOVING INTO THE ASSET CLASS

  • PRESTARE INFORMATI

    15www.P2PLendingItalia.com

    InApril2016welaunchedP2PLendingItalia.com...

    ...ThroughwhichwemonitortheentireP2PsectorinItalyandshareourviewsontheassetclass

    Feelfree toregisteratwww.P2PLendingItalia.com tojoinourpassionateinvestorcommunity!

    LaprimapiattaformadigitaleinlinguaitalianadedicataesclusivamentealP2PLending

  • rcondulmari@p2plendingitalia.com ematarrese@p2plendingitalia.com

    Roberto Condulmari Edoardo Matarrese