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Heartland takes 10% stake in HarMoney, offers funding line through platform

Monday 8th September 2014

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Heartland New Zealand has taken a 10 percent stake in peer-to-peer lender HarMoney for an undisclosed sum and will provide funding through New Zealand's only licensed platform as it continues to diversify its finance options.

Auckland-based HarMoney launched its online platform earlier this month, where it matches individual borrowers with lenders looking to invest, and determines the interest rate on the loan based on the credit risk of the borrower. Christchurch-based Heartland said it would provide a "funding line" for borrowers on the platform, without putting a dollar figure on how much this might be.

"The funding line will help provide initial momentum, complementing the investments made by retail investors," the bank said in a statement. "HarMoney and Heartland also intend to build on this relationship and are confident that scope exists to create high value products."

HarMoney was the first platform operator to receive a peer-to-peer licence under the new Financial Markets Conduct Act, which came into effect on April 1, providing legislation for a regime to match lenders with borrowers, with a $2 million cap on the amount allowed to be borrowed. The platform is looking to lure both investors and borrowers, offering loans of up to $35,000 with interest rates lower than credit cards for borrowers, and the possibility of a 12 percent risk adjusted return for lenders.

Heartland, formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, has been chasing acquisitions outside of traditional banking options to help grow earnings, and in February announce the acquisition of a reverse mortgage business from Seniors Money International for $87 million. In July, Motor Trade Finances turned down an offer from Heartland which would have added a loan book of some $438 million.

"The shareholding in HarMoney complements Heartland's strategy and provides a potentially valuable channel to attract customers in the household sector that current distribution networks may not reach," the bank said.

Shares of Heartland were unchanged at 96 cents and have gained some 13 percent since the start of the year.

HarMoney and Heartland weren't immediately available for comment.


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