Green energy from rate setter

Government invests $20m in P2P RateSetter’s green lending initiative

26 May 2017

Government invests $20m in P2P RateSetter’s green lending initiative

Peer-to-peer lending platform RateSetter has announced a $20 million investment from the Australian Government’s Clean Energy Finance Corporation (CEFC) to fund the launch of a green loan marketplace.

Through this unique partnership between a government authority and a fintech lending platform, RateSetter expects the $20 million to be deployed over the next 12 months and for CEFC's presence in its new "green loan marketplace" to attract other retail and institutional investors into the asset class, including local superannuation funds.

The platform will look to provide borrowers with loans to facilitate the purchase of approved energy efficient products, the aim is to incentivise both businesses and individuals to adopt clean energy technologies, from solar panels to electric cars, energy efficient lighting, emissions-reducing industrial applications, and more.

Ian Learmonth, CEO of the CEFC, said the facility will offer the potential to improve the marketability of green assets by bringing purchasers, installers, and manufacturers closer together.

RateSetter CEO, Daniel Foggo added the partnership showcases the “exciting opportunities for both businesses and consumers when Government agencies such as the CEFC team up with the fintech sector”.

“For the first time, everyday investors have direct access, alongside the CEFC and other investors to stable, attractive returns from a green asset-class, while green borrowers are rewarded with great rates. This highlights the enormous opportunities that can result when innovative businesses and Government organisations such as the CEFC work together,” he said.

RateSetter confirmed that it expected the rates for investors and borrowers to be around 7% p.a. at launch, with the majority of loan terms being 3-7 years.

Founded in 2014, the P2P lending platform has facilitated over $100 million in loans over the last three years, with over 6,000 Australians registered to lend on the platform. As well as the everyday investors, RateSetter stated it expects the green marketplace to also generate interest from larger investors, including ethical super funds.

Richard Lovell, debt markets lead for CEFC, said the facility will create a “real 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.

RateSetter and CEFC are forecasting significant demand for the green marketplace, citing a Global Sustainable Investment Review released in March that found the total amount of money in funds with social or green investment principles grew between 2014 and 2016 from US$148 billion to US$516 billion across Australia and New Zealand.

It’s been a busy week for RateSetter who picked up two prizes at the inaugural FinTech Australia Awards, including for Excellence in Business Lending and Consumer Lending. 

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