Anyone can now get in on the world’s fastest-growing financial sector, with peer-to-peer lending platform RateSetter launching a green loan marketplace, with returns of about seven per cent a year expected.
The marketplace allows investors of any scale – from individuals with $10 to spare through to major institutional investors – to lend to creditworthy individuals or businesses looking to fund energy efficiency, renewable energy and low-emissions technologies.
A $20 million seed investment has been committed by the Clean Energy Finance Corporation.
CEFC chief executive Ian Learmonth said the marketplace had the potential to improve the marketability of green assets, by bringing purchasers, installers and manufacturers closer together.
“There have been green loans before, and there has been peer-to-peer lending, but combining the two into one platform is an Australian first.”
It’s also bang-on trend. As the recent report by the Global Sustainable Investment Alliance showed, capital is pouring into green finance in Australia.
CEFC debt markets lead Richard Lovell said the CEFC had two core objectives with its investment in the platform.
“Firstly, the financing provided by the CEFC to this innovative new platform will increase the flow of finance into the clean energy sector through RateSetter’s retail lender base, which will now have access to borrowers via the peer-to-peer loan product,” Mr Lovell said.
“Secondly, the CEFC investment is intended to be a catalyst to encourage borrowers to increase their investment in clean energy projects, reducing their energy consumption and also lowering their carbon emissions.”
Mr Lovell said it would also create an opportunity for retail investors to have access to a regulated green loan product for the first time in the Australian market.
“Investment in this transaction could establish a successful precedent to pave the way for a rollout of similar ‘green’ platforms,” he said.
The types of assets eligible for finance from the new marketplace include solar and storage equipment, energy efficiency technologies such as power factor correction, voltage optimisation, LED lighting and HVAC upgrades. Low emissions vehicle technologies are also eligible.
It is expected the rates for investors and borrowers in the green loan marketplace will currently be around seven per cent a year, and loan terms will generally be between three and seven years.
Investors have a number of options for structuring their investments.
RateSetter chief executive Daniel Foggo said it created “exciting opportunities for both businesses and consumers”.
He said the platform would allow everyday investors, alongside the CEFC and other large investors, to have direct access to stable and attractive returns from a green asset class, while green borrowers can benefit from competitive interest rates.
“We are delighted to have the support of the CEFC to develop this initiative to support the uptake of clean energy in the home, on the road and in the running of Australian businesses,” Mr Foggo said.
“This is a truly innovative partnership that showcases the exciting opportunities for both businesses and consumers when government agencies such as the CEFC team up with the fintech sector.”