SocietyOne targets $50M through launch of Personal Loans Unit Trust
Australia’s leading marketplace lender, SocietyOne, is targeting $50 million through the launch of a Personal Loans Unit Trust designed to increase simplicity, liquidity, diversification, and access for its wholesale investors.
The Trust will provide investors with a consistent monthly income stream and enhanced liquidity, with an expected return of 6 per cent per annum. It will invest in a diversified portfolio of SocietyOne’s fixed rate unsecured personal loans, and includes a reserving mechanism that smooths earnings across the portfolio.
“We believe this new Unit Trust model will help to significantly simplify the experience of investing in our portfolio of personal loans, and provide investors with greater access to this asset class, consistent interest payments and enhanced liquidity options after 12 months,” said Mark Jones, CEO of SocietyOne.
“It’s just another example of how we are constantly iterating and improving on our model and mode of delivery in order to achieve our primary goal: providing a superior funding experience for our customers.”
The SocietyOne Personal Loans Unit Trust will target $25 to $50 million in assets under management in its first year of operations, and a return of 6 per cent per annum after fees, costs, and losses but before taxes.
Any proceeds above this targeted return will also be passed on to investors, who may gain access to their funds after 12 months, compared to the current fractionalised option which is fixed for the life of the loan, which is usually 36 to 60 months.
The Trust is able to smooth volatility in the earnings profile of the portfolio of loans by paying returns above a monthly crediting rate into a Reserve Account which can be rebated to the Trust during later periods, to help achieve a consistent crediting rate and regular returns.
It is available to wholesale investors, with a minimum application amount of $100,000, and provides returns competitive with bank hybrids and other trusts investing in similar high quality loan and credit assets.
“The Unit Trust was designed to provide investors with greater levels of simplicity, access, diversification, and liquidity, while delivering solid and consistent returns,” said John Cummins, Chief Investment Officer at SocietyOne.
“Investors will also gain access to a previously unavailable asset class, as banks prefer to keep these assets on their balance sheets due to the strong returns.
“The market has also evolved, with investors now wanting a more simplified structure and means to invest in this asset class, rather than having to make many smaller investments in individual loans.
“This is an issue that the Trust resolves, while simultaneously providing the same above-average returns,” he concluded.