The Plenti Lending Platform was established with the goal of making it easier for investors to invest in loans, one of the world’s largest asset classes. To date, we have achieved this ambition by providing a transparent marketplace where investors can invest directly in loans to borrowers. With the help of 25,000+ retail investors, the Plenti Lending Platform has funded over $1 billion in loans since its establishment in 2014 and has demonstrated a strong track record of delivering attractive, stable returns for investors.
In addition to funding loans via the Plenti Lending Platform, Plenti and its related entities fund loans via warehouse facilities, which have funding support from two of Australia’s largest banks and several other funders. As is customary in Australia, from time-to-time loans out of these warehouse facilities will be sold into asset-backed securities (ABS) structures.
Today, we are pleased to announce that Plenti Lending Platform members now have the ability to gain exposure to Plenti’s ABS notes via our new Notes Market.
What is the Notes Market?
The Notes Market has been established by Plenti to provide eligible investors with the ability to gain an economic exposure to ABS notes, which have previously been difficult for non-institutional investors to access. These ABS notes may be ‘rated’ by an external rating agency, or be unrated.
When you invest in the Notes Market, you do not directly acquire an interest in ABS notes. Rather, your funds are invested in a loan to the Notes Trustee, a special purpose vehicle and a subsidiary of Plenti Group, which uses those funds to purchase the ABS notes to which you gain an economic exposure.
By providing Australian investors the opportunity to gain an economic exposure to ABS notes, Plenti’s ambition is to help investors earn attractive returns and diversify their investment portfolios.
What are Asset-backed securities (ABS)?
Asset-backed securities or ABS are a type of debt security whose repayment is sourced from the cashflow of a pool of loans (i.e. auto loans, credit cards, personal loans). The debt securities or ‘notes’ issued in an ABS (the ABS notes) carry the right for the holder of notes to receive payments of interest and principal made by the underlying borrowers (being the persons that have the underlying payment obligations). Investors in ABS notes are typically banks, superannuation and life funds, specialist fixed income investors and other wholesale investors. In the calendar year ended 31 December 2021, over $48billion of ABS notes were issued by Australian issuers to investors. An ABS structure is often utilised by lenders to sell a pool of loans held in a bank supported warehouse facility to investors.
ABS notes are typically structured in tranches or “classes”, with each class earning a different margin (and corresponding interest rate) and carrying a different level of priority in the receipt of interest and principal as depicted below.
Who can invest?
ABS notes are complex products and each ABS structure is different. Making an investment to gain economic exposure to ABS notes may not be suitable for all investors. The risks associated with investing in ABS notes could result in the loss of your investment and associated income.
Accordingly, your access to the Notes Market is subject to a qualification process. You can request access to the Notes Market by accessing your Plenti Account, clicking the ‘Invest Now’ tab, then selecting the Notes Market, and following the prompts. You will be asked a series of screening questions to ensure you fall within the defined target market for the Notes Market as set out in the Target Market Determination. If Plenti considers that you fall or are reasonably likely to fall within the defined target market based on your responses to our screening questions, investing via the Notes Market will ordinarily be made available to you within two business days.
You will not be able to access the Notes Market if Plenti considers that you fall or are reasonably likely to fall outside the defined target market.
The Notes Market can be accessed via your Plenti Account on the Plenti Lending Platform website. Access is not provided via the investor app.
You must be a member of the Plenti Lending Platform to access the Notes Market. To learn about how to apply for membership of the Plenti Lending Platform, please see Section 12 of the PDS.
At the time of launch, the Notes Market offers investments that provide economic exposure to certain ABS notes issued as part of the Plenti Auto ABS Trust 2022-1 (Plenti 2022 Auto ABS), an automotive loan ABS transaction completed in June 2022.
What are the key benefits and risks of investing in the Notes Market?
Key benefits of an investment in the Notes Market:
- Economic exposure to an asset class traditionally reserved for institutional investors
- Access to potentially attractive returns
- Regular interest payments
- Potential Provision Fund protection
- Risk mitigation including parent company guarantees in relation to the payment of interest
Further information regarding the benefits of the Notes Market is set out in section 5 of the SPDS.
The Notes Market has a different risk profile to the Flex Market, Plus Market and Green Market, and has been designed for investors comfortable with a higher level of risk to earn a higher return.
Key risks relating to an investment in the Notes Market include:
- Poor performance of underlying loans in ABS trust
- Economic exposure to the most subordinated note in the ABS structure
- Risk of default on the payment of interest
- Investment term may be longer or shorter than the indicative term displayed in your Plenti Account
- Note Purchase Loans have limited recourse to actual payments of principal and interest in respect of ABS notes
Detailed information regarding the risks of an investment in the Notes Market is set out in section 4 of the SPDS and section 5 of the PDS. You should read the PDS, SPDS and TMD before making any investment decisions.