Blue Elephant Capital Management, the investment firm founded by ex-Nomura Holdings Inc. traders to snap up loans created through online marketplaces, is expanding into new waters: financing used boats.
The firm has promised to provide $25 million of capital to Boat Finance LLC, a venture founded last year in West Palm Beach, Florida. The startup will initially focus mostly on used vessels, which “already experienced accelerated depreciation,” Blue Elephant said in a statement set to be released Friday. That limits the risk of losses in the event that the boat needs to be seized and sold, it said.
The deal shows how quickly online lending is evolving and moving away from so-called peer-to-peer financing, in which borrowers are matched online with individuals looking to invest some extra cash. As more institutional investors and Wall Street firms crowd in, lending platforms are focusing on a growing list of niches: refinancing student-loan debt, funding elective medical procedures and providing money to open franchise restaurants.
“Marketplace lending has exploded in size and popularity,” Blue Elephant Chief Executive Officer Joseph Marra said in the statement. “Despite the emergence of a large number of lending platforms, we have found a shortage of truly exceptional underwriting and are excited about the experience that Boat Finance management brings to the table.”
Blue Elephant was started in 2013 and holds more than $100 million in loans from platforms such as Prosper Marketplace Inc. and New Zealand’s Harmoney. The asset manager has hired former employees of BlackRock Inc. and UBS Group AG to help it expand even further.
Boat Finance has begun lending in Florida and New Jersey, according to the statement. The lender plans to immediately expand into other states with high concentrations of boat ownership.
“When we saw what the marketplace lenders were doing, we knew that we could offer competitive yields with much higher quality collateral, given our depth of experience in the boat markets,” Boat Finance CEO Donald Schrama said in the statement. “We just needed to find a partner with the financial background to understand the opportunity.”
Originally posted on Bloomberg