Grayscale

Blue Elephant Capital Management is at the forefront of the newly evolving structural opportunities made possible by the intersection of technology and finance. Based in Irvington, New York, BECM is among the first to offer investors institutional quality access to the high and stable yields of the developing platform lending market.

BLUE ELEPHANT CAPITAL MANAGEMENT

The managing partners of New York-based Blue Elephant Capital Management are among the leading authorities on the evolving platform lending industry in the U.S. Founded in April 2013, the firm is investment manager to levered alternative strategies, which includes short-term, prime consumer loans issued by online lending platforms.

Responsive image
MANAGING PARTNERS :
J.P. MARRA, PRINCIPAL.

JP Marra is an expert in fixed income trading and the capital markets, having spent over 22 years leading multinational teams on a range of debt instruments. Prior to co-founding Blue Elephant, JP was head of cash rates trading at Nomura Securities in New York, which included primary dealer, repo, agency, inflation-linked and frequent borrower businesses. He led a global team of 100 as head of High Grade Rates at Banc of America, and ran the Treasury, mortgage pass-through and agency trading desks at Lehman Brothers.

ASHEES JAIN, PRINCIPAL.

For nearly a decade, Blue Elephant co-founder Ashees Jain has been managing portfolios and trading complex financial securities, such as structured products, hybrids and derivatives. Previously, Ashees was the executive director of underwriting and trading agency callable and rates structured notes at Nomura Securities in New York. He also traded derivatives-based securities while a vice president at Barclay’s Capital. Ashees began his career as a financial services consultant with Deloitte Consulting.

PLATFORM (Peer-to-Peer) LENDING

Peer-to-peer (P2P) or platform lending offers something that other fixed income vehicles currently don’t: low risk investments that consistently deliver stable returns significantly higher than those found in the traditional fixed income markets. Thanks to regulatory pressures on traditional banks, platform or peer-to-peer (P2P) is rapidly making inroads into the $850 billion unsecured consumer loan industry, with some predicting that today’s $3 billion niche could grow to $50 billion by 2020, including small business lending. The sector’s high, stable yields, low default risk, and lack of correlation to other fixed income assets has also caught the attention of yield-starved institutional players and begun to crowd out mom-and-pop investors.

Online platform lending, also known as peer-to-peer lending, is a cottage industry that most agree started in 2006. Online platforms facilitate transactions between borrowers seeking loans financed by individuals or institutions, eliminating the need for traditional banks. The platforms are upending the old bank model, using technology to capitalize on structural inefficiencies, and are compressing the costs of originating, servicing and funding loans. Online lending markets have emerged globally for personal loans, student loans, small business loans, and auto loans.

Though disruptive to bank balance sheets, online lenders meet borrower and investor needs in a way that banks simply can’t. Borrowers typically receive lower interest rates than they would with a traditional loan, and investors are repaid with healthy rates of return, through monthly automatic payments, minimizing default risk. For example, investors with well-diversified loan portfolios of unsecured, short-term consumer loans can expect returns of between eight to 10 percent. That’s greater yield than typical fixed income investments, and with lower risk – default rates for online loans average around three percent annually, below the five percent average default rate for traditional unsecured consumer loans. Yields are based on borrower interest rates and credit characteristics, providing an alternative that is uncorrelated to the bond market.

With interest rates at all-time lows and banks facing increased regulatory pressures, platform lenders have moved beyond individual investors and are gaining traction with large pension funds and other high profile institutional investors. The sector is led by two major online platforms in the United States – Prosper Marketplace and Lending Club. Prosper launched the first P2P lending site in 2005, and in September 2013, raised $25 million from Sequoia Capital, BlackRock and others following a $20 million capital raise in January 2013. Lending Club supported a secondary capital raise of $125 million from Google and Foundation Capital in May 2013, valuing the company at $1.55 billion.

2013 was a headline-making year for the world of peer-to-peer / platform lending. In addition to hosting its first industry conference – Lendit 2013 in San Francisco, CA – the sector welcomed Vikram Pandit, Tom Glocer, Google, Guggenheim Partners and BlackRock as new converts.

NEWS

Peer to peer lending: The wisdom of crowds
May 19, 2014 | Financial Times

Blue Elephant Capital Management looks forward to bullish year for P2P
April 10, 2014 | Bankless Times

To have your peer-to-peer cake and eat it
March 16, 2014 | Financial Times

Peer-to-peer lending: Banking without banks
March 1, 2014 | The Economist

P2P Lenders Install Investor Speed Bumps
February 10, 2014 | Financial Times

Borrow or Lend Online – But Be Careful
February 9, 2014 | The Wall Street Journal

Press Release: All Signs Point Positive for Peer-to-Peer Lending in 2014
February 4, 2013 | Blue Elephant Capital Management

After Breakout Year, Peer-To-Peer Lending Still Evolving
January 23, 2014 | FINalternatives

Peer to Peer Lending: Ready, Set, Grow, Despite a Few Red Flags
January 8, 2014 | Knowledge@Wharton University of Pensylvania

CONTACT

Blue Elephant Capital Management
One Bridge Street, Suite 87
Irvington, NY 10533
  (914) 274-8483
info@bluelep.com

For additional information please contact us: