Under the exclusive funding deal, Crowd Bank – which has approximately 34,000 investors and $260 million funds under management – will provide an initial investment of up to $50 million in Zagga’s platform.
Zagga is an online marketplace lender that uses a custom-built algorithm to match wholesale/sophisticated investors with creditworthy borrowers for loans (between $1 million-$10 million) secured by a registered, first mortgage over real property.
It marks the third international market the Japanese fund has entered into, following previous investments in the US and Hong Kong.
Speaking of the investment, Crowd Bank president Kaneda Hajime commented: “Australia is a marvelously attractive environment for investors driven by political stability, government efficiency and a sound fiscal balance sheet, and we intend to invest aggressively in this market.
“We believe the most important element of success, in terms of finding a good investment destination, is to collaborate with a strong local partner that we can trust.
“In Zagga, we are partnering with a well-established loan manager with a proven investment track record, good corporate governance, advanced risk management and a focus on transparency.”
Zagga has said the investment will help support the marketplace lender’s growth ambitions for 2021.
Peter Clare, the chairman and co-founder of Zagga, noted that it had seen strong performance in 2020, growing 42 per cent on the prior year to originate more than $162 million in loans (both direct and via its broker portal).
He added that the platform is aiming to grow total originations by more than 33 per cent in 2021, targeting an active book in excess of $250 million.
“There is huge opportunity for continued growth in the Australian alternative lending market, which is being recognised by global investors like Crowd Bank.
“We’re very pleased to be embarking on the next phase of our growth journey with Crowd Bank, and continuing to support Australian businesses with flexible funding to help them realise their own growth objectives.”
The CEO of Zagga, Alan Greenstein, added that the alternative investment platform has been seeing particular growth from small businesses over 2020, as “more businesses turned to alternative finance due to banks effectively closing their doors to many of their existing clients, including small businesses”.
“A large majority of our new borrower clients are those who historically have had longstanding relationships with traditional lenders, but who are increasingly seeking the flexibility, speed and transparency offered by alternative lenders, like Zagga,” he concluded.
[Related: Online lender launches new broker portal]