Project Spring

Management Presentation
May 2017
Contents

1 Executive Summary 7 Financial Performance

2 Business Overview 8 Portfolio

3 Market 9 Funding

4 Origination 10 Timetable

5 Underwriting 11 Proposed Data Provisioning

6 Collections 12 Appendix
 Contents

Executive Summary
Executive Summary
• LendInvest is the UK’s leading online marketplace for property finance.

• The company provides finance to property professionals, and provides a platform for sophisticated investors and
multinational institutions to invest in property-backed loans.

• Since 2008, LendInvest’s investors have invested almost £1 billion in loans to borrowers who have bought, built or
renovated over 4,000 properties worth in excess of £1.7 billion in over 120 UK towns and cities.

• Having built a market-leading position in short-term property finance, the next step in the group’s evolution is to
enter the UK buy-to-let market.

• Following over a year of planning and market research, LendInvest is now ready to bring its buy-to-let mortgage
product to market and raise institutional funding to finance the growth of the product.

4
 Contents

Business Overview
Introduction to LendInvest

LendInvest began as an offline real estate lender
first and became an online lender later
• Set up in 2008 as ‘Montello’ in response to bank
retrenchment and rebranded as ‘LendInvest’ in 2013 with
the launch of its mortgage marketplace.
• Atomico, the Venture Capital business controlled by the
founder of Skype, is a key equity investor alongside
management.
• Diverse capital base of over £420m, from a range of
sophisticated investors and institutional funding sources.
LendInvest is now looking to expand into Buy-to-
Let (BTL) mortgages for three key reasons
• There are synergies between BTL and LendInvest’s
existing short-term property finance offering.
• BTL is an area where LendInvest’s underwriters already
have extensive experience.
• This provides an opportunity for LendInvest to continue
expanding its loan book, focusing on the growing
professional landlords’ BTL mortgage market.

Project Spring – Raising finance to launch the new BTL product

• £50-75m initial commitment, forecast to increase to c.£200-250m over the next 24 months.
• LendInvest is considering either a combination of senior and mezzanine debt, or entering into a forward flow relationship with a
third party.
• The product will be launched in H2 2017 once funding is in place and LendInvest expects its funding strategy to evolve as its loan
book grows, which may include a public securitisation in the medium term.

6
An Award-Winning Hybrid Marketplace Lender
Investors Borrowers

Online investment platform Professional investors

• Investors create own portfolios 28% • Bridging loans
• Select loans to invest in • Auction finance

LendInvest Capital funds Property developers

• Institutional investors 29% • Development finance
• Banks • Development exit
• Private clients • Refurbishment finance

Institutional funding lines

Investment bank (Macquarie Bank)
•
Professional landlords
43%
•
•
UK challenger bank
Alternative finance lender Mortgage Platform • Buy-to-Let mortgages
• Listed infrastructure fund
• Pension fund (Merseyside Pension Fund)

7
Key Milestones
Amount
lent to date

Traditional Offline Model Online Marketplace Platform

2008 2010 2011 2012 2013 2014 2015 2016 2017

Set up Montello Set up Secured first Set up second Launch of Build out scaled Series A £22m from Series B £17m from Launch of longer
Bridging Finance first fund bank funding fund in LendInvest and online investment Beijing Kunlun Atomico duration mortgage
line Luxembourg online investment platform products (BTL)
Launch of £40m funding line from
platform
£80m funding line Development Macquarie Beijing Kunlun
from a leading UK Finance product repaid
Launched Property
challenger bank
Development Academy Launch of new
investor platform
Launch of additional short-
term mortgage products

8
Future Strategy
LendInvest’s Key Strategic Objectives LendInvest’s Annual Origination Targets
1. Lend more, sustainably
Product 2017 2018 2019
2. Be the preferred lender for its target customers and brokers
Bridging 400m 600m 850m
3. Be technologically innovative and data driven
4. Be the preferred channel for access to mortgage investments Development 150m 250m 450m
5. Be funded by diverse, flexible and sustainable capital BTL 20-50m* 150m 280m

Why BTL?
• Strategic alignment – entering the BTL market achieves several strategically aligned objectives for LendInvest.
• Diversification – removing the reliance on LendInvest’s short-term bridging product.
• Opening up a new borrower base – enabling stronger cross-selling opportunities by tapping into a new market of clients that previously may not
have borrowed from LendInvest. Complementing this point is the sheer size of the BTL market – at c.£40bn annually, LendInvest will only need to
capture a very small share of the market to gain significant benefit for the business.
• Synergies with short-term property finance – the BTL product serves as a natural exit route for the 50% of LendInvest’s short-term bridge
borrowers that refinance, hence offering BTL mortgages strengthens LendInvest’s core value proposition by owning more of the supply chain.
• Lending more, sustainably – the duration of BTL mortgages enables LendInvest to grow its loan book in a sustainable way. The BTL product is a very
professional, yet commoditised, less bespoke product, enabling scale to be achieved quickly.
• An opportunity to innovate – the BTL market offering is, in LendInvest’s opinion, broken. Inefficient processes, limited technological influence /
adaptation, and overall poor customer experience offer LendInvest an opportunity to innovate.

* BTL origination in 2017 depends on timing for closing of funding and the launch of the product

9
 Building on Success in Short-Term Property Finance

c.£1bn c.£1.7bn 54.0% 48.9%

Amount lent since 2008 Total value of properties Weighted average LTV Weighted average
funded (bridging) LTGDV (development)

4.5% 2.5% 100% 4.5%

Average arrears rate Average default rate Capital recovered Net Interest Margin
(2MIA excl. defaults) (receivership cases)

Note: Arrears and default rates calculated as a simple average of monthly rates over the period from Jun-16 to Mar-17, based on number of properties.

10
 Corporate Structure

Employee and
Christian Faes Ian Thomas Employee
Atomico IV LP Stephan Wilcke former employee
CEO CIO options
shares

14.3% 36.5% 36.5% 0.2% 6.2% 6.3%

LendInvest Private LendInvest LendInvest LendInvest

LendInvest Capital LendInvest Funds LendInvest Loans LendInvest
Finance General Security Trustees Secured Income Finance No. 3
Management Ltd Management Ltd Ltd Finance No. 1 Ltd
Partners Ltd Ltd plc Hold Co. Ltd
Intermediary Holding Fund Management Regulated mortgage
General Partner to Holds security on behalf of Intermediate Holding Loan originating SPV
Company Company Loan originating entity lending and administration
LendInvest Income LP Fund SPV companies Company

LendInvest Capital LendInvest

LendInvest LendInvest LendInvest LendInvest
Advisors Ltd Trading Partners Newco SPV for
Finance No.2 Ltd Finance No.4 Ltd Finance No.5 Ltd Finance No. 3 Ltd
Advisor to LendInvest LLP Project Spring
Capital Real Estate Funding SPV Funding SPV Funding SPV Funding SPV
Opportunity Fund Funding SPV

11
 Senior Management Team
Christian Faes, Co-Founder & Chief Executive Officer
Prior to Montello/LendInvest, Christian practised as a solicitor in London with
Clifford Chance, and then as in-house legal counsel with Deutsche Bank. Christian
was previously a partner at a boutique commercial and property law firm in
Australia, and was also involved with a mezzanine mortgage finance business.
Rod Lockhart, Managing Director of LendInvest Capital
Rod is a Chartered Surveyor, with a degree in Investment and Finance in Property
from the University of Reading. Rod joined from CBRE where he held the position
of Senior Director, advising UK and global institutional fund and pension scheme
clients on direct and indirect real estate investments.
Steve Larkin, Director of Development Finance
Steve spent 26 years at RBS, and was most recently Senior Director and Head of
the Residential & Development team in the Restructuring division. In addition,
Steve held a range of senior positions in real estate credit, restructuring and
origination.
Matthew Tooth, Chief Commercial Officer
Matthew joined LendInvest from leading online trading business, IG Group,
where over 15 years he held various senior management roles including
Managing Director (IG Index), CFO, and Head of Business Development.
Guy Evans, Chief Technology Officer
Guy joined LendInvest in early 2017 and is a seasoned CTO with senior
management experience across a number of innovative technology-enabled
businesses serving the financial services sector, including Interactive Investor,
Megabuyte and BullionVault.
12
Ian Thomas, Co-Founder & Chief Investment Officer
Prior to Montello/LendInvest, Ian was an executive with the Ballymore Group
(which was one of the largest property developers in Europe, prior to the credit
crisis), and before that with SEGRO plc. Ian is a Chartered Surveyor.
Roy Armitage, Head of Credit
Roy has almost 30 years of senior mortgage credit experience and was previously
Head of Risk & Compliance with specialist Buy-to-Let lender, Kensington
Mortgages. Prior to this Roy held similar positions with JP Morgan and Halifax
Mortgages.
Derek Mochan, Chief Financial Officer
Derek is a Chartered Accountant and member of the Chartered Institute of
Securities & Investment. He spent 6 years with KPMG and 10 years with GE
holding senior finance roles. Derek also ran a retail financial services business in
the Middle East for a regional conglomerate.
Johnathan Ransom, Chief Operating Officer
Johnathan is a Chartered Surveyor and joined LendInvest having had a varied
career in property funds management, business consultancy and SME lending. He
has previously worked for companies such as CBRE, INVESCO and EY, and co-
founded LoanBook Capital, a Spanish SME lending platform.
Ruth Pearson, General Counsel
Ruth joined LendInvest after 8 years at Simmons & Simmons LLP. As a Managing
Associate, Ruth focused on domestic and cross-border corporate, real estate and
acquisition financing arrangements. Ruth’s secondments included the real estate
structuring team at RBS and the syndicated loans team at SEB.
 Team Structure Chart
Christian Faes Ian Thomas
CEO CIO

Johnathan
Ransom
COO

Willem Steve Larkin

Carmen Dixon Rod Lockhart Matthew
Derek Mochan Guy Evans Ruth Pearson Wellinghoff Director of Roy Armitage
VP of PR and MD Funds Tooth
CFO CTO General Counsel VP of Development Head of Credit
Comms Management CCO
Compliance Finance

Credit Risk
Regulatory Development
HR Finance PR Compliance Underwriting
Counsel Finance
Loan Servicing

Service Business Product Experience Client Capital

Operations Technology Funds BDMs Marketing
Delivery Intelligence Mgmt Design Services Markets

• LendInvest currently employs over 100 FTE. LendInvest strongly believes that its people are its strongest asset.

Represents key people for BTL – LendInvest has also started the process of hiring a BTL-focused Business Development / Relationship Manager

13
 Products

Bridging Auction Buy-to-Let Development Development Exit

Loans from £100k to £7.5 million Loans from £75k to £3 million Loans from £50k to £2 million Loans from £500k to £15 million Loans from £250k to £5 million
LTV up to 75% LTV up to 75% LTV up to 80% LTGDV up to 70% LTV up to 70%
Terms up to 36 months Terms up to 12 months Terms up to 30 years Terms up to 24 months Terms up to 12 months

Often used for Often used for Often used for Often used for Often used for

Buying property at auction Buying property at auction Remortgage Property development Developments
Short term cash flow requirements Refurbishments Ground up builds that have reached
Purchase
Refurbishments Extensions Heavy refurbishment practical completion
Extensions

Existing Existing New Existing Existing

14
 LendInvest’s BTL Product
Max Fixed Initial Reversion Product Min loan Loan
Tier 1 Early Redemption Charges Max loan size
LTV period rate rate fee size term
2 year 3.69% Y1: 3%, Y2: 2%

Defaults: 0 in 60 months 3 year 3.79% LIBOR + Y1: 3%, Y2 & Y3: 2% £2m at 60% LTV
75% 1.49%
CCJs: 0 in 60 months 4 year 3.89% 4.59% Y1 & Y2: 3%, Y3: 2%, Y4: 1%
£1.5m at 65% LTV
Missed mortgage/secured payments: 0 5 year 3.99% Y1 & Y2: 3%, Y3 & Y4: 2%, Y5: 1%
in 36 months 5-30
£1m at 70% LTV £50,000
2 year 4.49% Y1: 3%, Y2: 2% years
Unsecured loan arrears: No more than
2 in 36 months £750k at 75% LTV
3 year 4.59% LIBOR + Y1: 3%, Y2 & Y3: 2%
No history of bankruptcy or IVA 80% 1.49%
4 year 4.69% 4.59% Y1 & Y2: 3%, Y3: 2%, Y4: 1% £500k at 80% LTV

5 year 4.79% Y1 & Y2: 3%, Y3 & Y4: 2%, Y5: 1%

Max Fixed Initial Reversion Product Min loan Loan

Tier 2 Early Redemption Charges Max loan size
LTV period rate rate fee size term
2 year 4.29% Y1: 3%, Y2: 2%

Defaults: 0 in 12 months, 2 in 24 months 3 year 4.39% LIBOR + Y1: 3%, Y2 & Y3: 2% £2m at 60% LTV
75% 1.49%
CCJs: 0 in 12 months, 1 in 24 months 4 year 4.49% 4.69% Y1 & Y2: 3%, Y3: 2%, Y4: 1%
£1.5m at 65% LTV
(max £5,000 and must be satisfied)
5 year 4.59% Y1 & Y2: 3%, Y3 & Y4: 2%, Y5: 1% 5-30
Missed mortgage/secured payments: 0 £1m at 70% LTV £50,000
2 year 4.69% Y1: 3%, Y2: 2% years
in 12 months, 1 in 36 months
£750k at 75% LTV
Unsecured loan arrears: Not counted 3 year 4.79% LIBOR + Y1: 3%, Y2 & Y3: 2%
80% 1.49%
No history of bankruptcy or IVA 4 year 4.89% 4.69% Y1 & Y2: 3%, Y3: 2%, Y4: 1% £500k at 80% LTV

5 year 4.99% Y1 & Y2: 3%, Y3 & Y4: 2%, Y5: 1%

15
 Interest Cover Ratio
Applicant Single properties HMOs and other property types
Basic rate taxpayer (20%) 125% 130%
Limited company & LLP 125% 130%
Higher rate taxpayer (40%) 140% 145%
Additional rate taxpayer (45%) 140% 145%
Refinance (no additional capital raised) 125% 135%

• While the BTL product will be primarily targeted at the limited company / LLP market, LendInvest can also lend to professional individuals.

• 5% stress rate for all ICRs, except for refinances that don’t raise additional capital which are stressed at the product reversionary rate (with
an appropriate LIBOR assumption).

• The ICR may be up to 10% lower than the product ICR guideline levels outlined above (e.g. 115% for a single property where the
borrower is a limited company / LLP), at underwriter discretion and if the borrower’s circumstances support the decision.

• In external marketing documentation the stress rate will initially be stated as 5.5% to attract higher ICR business while the loan pool is
relatively small. However, the ICR reported in data tapes will be based on the 5% underwriting stress rate.

16
 Risk & Compliance Oversight
Regulatory Status

• LendInvest is not a bank so it is not subject to PRA regulation, though the group has been cognisant of PRA rules when developing the BTL product.
• LendInvest Limited is currently interim authorised and regulated by the FCA for consumer credit business and credit brokerage. No FCA authorisation is
required for LendInvest Limited’s current activities or planned future activities, and the company is considering whether this is needed going forward.
• LendInvest Funds Management Ltd (LFML) is authorised and regulated by the FCA as a small authorised Alternative Investment Fund Manager (AIFM) with
permission to manage alternative investment funds. LFML is a wholly-owned subsidiary of LendInvest Limited.
• LendInvest Loans Limited (LLL) is authorised and regulated by the FCA as a regulated mortgage lender. LLL is a wholly-owned subsidiary of LendInvest
Limited and is able to lend against owner-occupied and first-time investment property (consumer Buy-to-Let – outside the scope of Project Spring).

Credit Committee (meets on a monthly Disclosure Committee (meets on a Senior Adviser to the Board of
basis) quarterly basis) Directors

• Comprises the Head of Credit (as Chairman),
Servicing Manager, MD of LendInvest Capital,
CEO, CIO, CFO, Director of Development
Finance, VP of Compliance, Head of
Underwriting and Head of Distribution.
• Responsible for overseeing the credit risk profile
of the business and ensuring the portfolio risk
profile is within the defined Risk Appetite
Framework as agreed by the Board.
• The Credit Committee will review, agree and
recommend for approval by the Board, the
Servicing Policy, Lending Policy and Mortgage
Loss Provisioning Policy on at least an annual
basis.
• Comprises the CFO (as Chairman), General
Counsel, CEO and CIO.
• Purpose is to protect the integrity of
LendInvest’s decision-making processes.
Risk Committee (meets on a quarterly
basis)
• Comprises the Head of Credit (as Chairman),
CEO, CIO, CFO, VP of Compliance, General
Counsel, Head of Distribution, MD of LendInvest
Capital, Servicing Manager and Regulatory
Counsel.
• In June 2016, Stephan Wilcke, a former Executive
Chairman of OneSavings Bank and former CEO
of the Treasury Asset Protection Agency, was
appointed as a Senior Adviser to the Board of
Directors to advise on new market entry and
regulation.
• The Group has an in-house regulatory counsel
(in addition to the Group’s general counsel) to
monitor regulatory developments.
• The Group also uses tools such as weekly
updates from third party providers to stay
abreast of relevant changes, and engages
external counsel to advise on regulatory
matters.

17
 IT Systems – Overall Architecture
• LendInvest was created with the aim of innovating in the mortgage market through the use of technology and data.
• It is a financial services business first, but technology is a key enabler, and plays an important part in the operating model, as well as future plans.
Approach
• The architecture adopted for the lending business is a mix of best-in-
class 3rd party solutions and self-built features, which are focused
primarily on achieving the best customer experience.
• The company focuses on developing features, functionality and user
experiences that add most value.
• They do not seek to reinvent 3rd party systems that are already fit for
purpose, and on occasion embed best-in-class 3rd party systems in the
technology architecture.
• In 2016 LendInvest’s focus was on re-launching and improving its market
leading online investment platform for individuals to invest in mortgages.
Technology used for lending
• To date, LendInvest has used Salesforce as the platform of choice to host its
loan origination system, internally configured for its purposes.
• For the BTL product, LendInvest will use ‘Apprivo2’,which is a modern,
sophisticated loan origination system developed by BEP Systems – this off-
the-shelf solution works well for BTL, given the product is relatively
standardised, whereas making Salesforce bespoke to BTL would have been
inefficient.
• The Apprivo2 system will be incorporated into LendInvest’s existing
architecture, as depicted overleaf.
18
Team
• Over a quarter of LendInvest’s workforce are technology-focused.
• LendInvest adopts a fully ‘insourced’ model, with all key roles covered,
including Product Management, Business Analysts, Experience Design,
Engineering, QA and DevOps.
• LendInvest uses a bimodal approach to delivery – (i) an Agile approach, when
possible, to deliver incremental improvements; and (ii) a more traditional
project management approach, when appropriate, for tasks such as 3rd
party systems integrations.
Business continuity & security
• Cloud-based systems – AWS-hosted platform, and all applications are SaaS.
• In case of disaster all data and communications can be re-routed to another
location, and business continued as usual.
• All production application databases are built with a master and two
mirrored replicas, providing multiple availability zones for the data.
• Email and file storage are hosted by Google and come with their own backup
capabilities.
• Firewall protection is in place, traffic is monitored for intrusion prevention,
and anti-virus and anti-malware are in use.
 IT Systems – BTL Journey
Broker /
Borrower

• Customer Portal
User Web Interface • Application
• Status Updates

Lead / Enquiry Origination Loan Servicing

(main system for BTL)

• Enquiry Qualification
• Application Management
• CRM System • Underwriting • Primary / Special Servicing

Back-up Servicing
LendInvest Data Warehouse • Data Ownership
• MI / BI Analysis

19
 Contents

Market
 Market Overview
• Increased investment in the UK residential market has resulted in BTL UK BTL gross mortgage advances (£bn)
mortgages restoring to around pre-crisis levels. This has been driven by a low House Purchase Remortgage Combined
interest rate environment and low returns from other low risk asset classes. 44 45
50
41 43 44
38 40 40
• Forecasts suggest the BTL mortgage market will be flat or fall in 2017, but 40
27 27
specialist lenders are expected to grow their business as their more
30 20
20 13 14
bespoke underwriting approach can attract landlords falling outside of the 8 8
10
more systems-driven rules used by high street lenders.
0

• The BTL market is facing three key headwinds:

• the additional 3% Stamp Duty Tax surcharge for purchases of rental properties and second homes that was implemented in April 2016;

• tighter Prudential Regulation Authority requirements, including (but not limited to) interest rate stress tests, which came into effect in January
2017; and

• the tax relief cap which will take effect from April 2017 (tax relief on mortgage interest payments will be capped at 20% by 2021), causing many
lenders to underwrite at a higher minimum ICR of 145% as standard.

• LendInvest’s product will be primarily aimed at Limited Companies / LLPs, enabling it to focus on professional landlords who are less affected by these
headwinds – for example, Limited Companies are not affected by the new cap on income tax relief for mortgage interest payments.

• A leading BTL lender predicted there would be increased remortgage demand in 2017 as landlords look for the best mortgage to fit their circumstances
following regulatory and tax changes, with 60% of applications for BTL mortgages being via limited companies in Q3 2016.

• To meet the business’s origination plan, LendInvest will only need to achieve <1% of the annual BTL mortgage market.

Source: NAO, CML, Mintel, Kent Reliance

21
 Key Market Dynamics
Increased stamp duty on
second home purchases
• Additional 3% stamp duty
surcharge for second home
purchases from April 2016.
Summary of changes
• Fewer property purchases, which
are a trigger for obtaining a BTL
mortgage.
Potential risks to
LendInvest
• Remortgaging activity remains
high due to competition and
regulatory / tax changes.
• A Mortgages for Business survey
Potential suggests that 77% of BTL purchase
opportunities for
applications are made via limited
LendInvest company structures, up from 69%
at the end of last year – however,
significantly fewer lenders offer a
product for limited companies
given it is more specialist.
22
Tighter PRA requirements for
BTL mortgages
• New, tougher affordability tests
from January 2017 based on
hypothetical interest rates up to
5.5%.
• Assessment of all portfolios for a
new application from landlords
with four or more properties.
• The PRA / FCA may in future
require that regulated lenders
limit LTVs and ICRs on BTL
mortgages.
• While these requirements only
apply to PRA-regulated lenders,
the unregulated status of
professional BTL lending could
change in future, so it is important
to not deviate significantly from
the PRA rules.
• LendInvest is not PRA-regulated.
• Many regulated lenders do not
have the capacity to underwrite
manually and are therefore setting
higher minimum ICRs for all
borrowers, whereas LendInvest
can assess borrowers on a case-
by-case basis.
Tax relief reduction Housing market slowdown
• Tax relief on mortgage interest • Recent strong house price growth
payments will be capped at 20% shows signs of slowing down, due
by 2021, with changes phased to concerns over Brexit, the
from April 2017. forthcoming general election and
government intervention to
• Reduction in allowable expenses
restrict the BTL market.
for landlords when calculating
taxable profit.
• Capital Gains Tax relief limits for
owners of additional properties.
• Tax relief reductions are likely to • Lower house price growth would
have a greater adverse impact on reduce returns from BTL
regions with low property yields investments, which may reduce
(i.e. London and the South East), the market size.
where the resulting loss of post-
• The loss severity on repossessed
tax income would be
properties may increase if the
proportionately greater.
market is less buoyant.
• LendInvest are targeting Limited • While growth has been slowing
Companies / LLPs, which aren’t down, it remains positive and the
affected by income tax changes as fundamentals of the housing
they pay corporation tax (19% market (importantly a shortage of
currently), as well as professional supply) remain unchanged.
landlords
• Origination will be split across
England, Wales and Scotland to
ensure no significant exposure to
an individual region.
 UK BTL RMBS Performance
Arrears (excl. Repossessions)
6 30+ Days 60+ Days 90+ Days
Delinquency (% of CB)

Repossessions Loss Severity

O/S Repossessions (% of CB)

0.3 40

Loss Severity (%)

30
0.2
20
0.1
10

0.0 0

Source: Moody’s
Note: Arrears and repossessions graphs show Moody’s index excluding Aire Valley. “CB” is the current balance at the time of calculation.

23
 Prime vs. Specialist Mortgages
Prime BTL lenders and products *
• Large number of products in the market.
Lenders offering products to Ltd Co borrowers Products available to Ltd Co borrowers
• The market is dominated by banks.
• Generally higher rates for products aimed at Ltd Companies (c.40% of
the market – see right). 42% 42%
40%
42%

• The average cost of a 2-year fixed rate BTL mortgage is 4.22% for 30%
limited companies and 2.97% for individuals (source: Moneyfacts). 23% 23%

• Durations of 20 to 35 years, with initial product fixes of <=5 years. 16% 16% 16%
12% 13%
• Fewer options for 4-year fix, which is offered by LendInvest.
H1 '15 H2 '15 H1 '16 Q3 '16 Q4 '16 Q1 '17
• No adverse credit allowed and very low rates of default.
Ltd Co BTL transactions *
• Price elasticity; borrowers compete on rates.
• LendInvest’s Tier 1 product targets the prime segment. By number of cases By volume (£m)
44%
Specialist
34%
• Focused on underserved borrower niches. 30% 31%
40%
25%
• Generally provided by Specialist Lenders. 20% 30% 30% 29%
• There are currently limited providers in the near-prime BTL space. 21%
18%
• Lenders can compete on product criteria other than the rate.
• LendInvest’s Tier 2 product is at the upper end of the near-prime H1 '15 H2 '15 H1 '16 Q3 '16 Q4 '16 Q1 '17
segment, with relatively low levels of adverse credit allowable.
Sources: Limited Company Buy to Let Index (Mortgage for Business), Kent Reliance, Moneyfacts. Note: * For Limited Company BTL borrowers as a proportion of the whole BTL market

24
 LendInvest’s Tier 1 Pricing vs. Competitors

6.00%
Fixed rate + (arrangement fee / fixed period)

5.50%

5.00%

4.50%

4.00%

3.50%
2-y 3-y 5-y 2-y 3-y 5-y
75% LTV 80% LTV
Fixed rate period with maximum LTV

Note: Based on a sample of BTL mortgages available for Limited Companies, correct as at April 2017

25
 Contents

Origination
 Routes to Market
• Mirror existing distribution strategy – nearly all of LendInvest’s existing intermediary partners do specialist BTL alongside short-term property
finance, so no new distribution relationships are required to launch the product.
• The BTL book will have a higher proportion of smaller loans outside of London and the South East compared to short-term property finance –
origination of these will be supported by changes being implemented to lower the fixed cost of mortgages across LendInvest’s product suite (e.g. using
lawyers outside of London), as well as new Business Development Manager hires (see page 29).

Packagers – 50%
Specialist packagers
already known to
LendInvest, covering
England, Wales & Scotland.
Directly Authorised
(DAs) – 40%
Specialist DAs who write
bridging and development
loans with LendInvest and Direct – 10%
have BTL capabilities – Borrowers exiting from
cover England, Wales & short-term property
Scotland. finance, or approaching
LendInvest directly.

Three routes to market supported

by online tools and CRM

27
 Brokers & Packagers
Why brokers and packagers will choose LendInvest

• LendInvest already has strong relationships with brokers and packagers.

• With the addition of BTL, LendInvest will offer a one stop shop for products used by professional property investors.
• LendInvest will offer competitive procuration fees.
• LendInvest can offer support to professional individuals looking to set up a Limited Company.
• The speed of execution offered by LendInvest helps brokers and packagers deliver a superior customer experience.
• As a specialist lender, LendInvest can offer flexible underwriting to help brokers and packagers meet their customers’ needs.

Existing packager relationships

manormortgage

Existing broker relationships

• LendInvest has relationships with a large number of active specialist mortgage brokers.
• BDMs will manage existing broker relationships and can seamlessly add BTL to the product suite.

28
 Business Development Managers
• 8 BDMs, reporting to the CCO.
Existing BDMs
• The current BDM team is Valuations instructed by product as at 1 May 2017
sufficient for initial BTL growth, 1 New BDM hires
350
Refurbishment Finance Pre-Construction Finance Development Finance
but LendInvest is recruiting 6
Development Exit Bridging Finance Auction Finance
more BDMs to support further
growth across the business. 300

• Key responsibilities of BDMs

1
include building brand awareness 1 250

locally, building and managing a

network of introducers, and taking

Record Count
200
responsibility for closing deals.
• London-based BDMs manage 1
150
broker and packager relationships
nationwide.
2 6
The existing team is able to add
100
•
BTL to its product suite, but the
new BTL-focused hires will be able 50
to share best practice across
LendInvest’s BDM network.
BTL-focused
+2
0
• £40m per month current hires Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 run rate
origination run rate for bridging Valuation Instructed Date
and development and Q1 2017 was
a breakout quarter on volumes.

29
 Marketing & PR
• Marketing and PR department of 10 FTE and budget of
£500k per annum to support existing lending business.
• Marketing strategy is to support a number of lending
products and promote these together.
• Limited incremental marketing spend needed for BTL
given its synergy with the existing short-term property
finance offering.
• Salesforce and Marketo tools in place to support modern
CRM.
• Events and broker education programme to support
market relationships.
• LendInvest is also active in PR and thought leadership:
• Quarterly releases of the LendInvest BTL Index (since 2014) –
analysis of the UK buy-to-let market that tracks trends and
changes across a range of metrics that impact property
investors’ existing assets and future investment decisions.
• Published ‘Starting Small To Build More Homes: a blueprint for
better policymaking for property SME market’ highlighting
industry evidence for the first time to examine the root cause
and subsequent impact of challenges faced by property SMEs.

30
 What Makes LendInvest Different?
Access to deal flow
• 10% of BTL origination is expected to come
from LendInvest’s short-term property
finance book, and 90% is expected to come
from its broker and packager network.
• Intermediary network: 9 packager
relationships and 90 broker relationships
nationally. BTL will support the existing
business and vice versa.
• 8+ Business Development Managers
nationally, with increasing focus on the
North of England.
• Hiring BDMs outside of London will
support nationwide origination.
• In the process of hiring a BTL-focused
Business Development / Relationship
Manager.
• Current feedback on the LendInvest offer
and service is extremely positive. The
market is positive about its entry into BTL.
31
Supported by innovation High levels of customer satisfaction
• LendInvest make it a priority to provide a Award winning short-term lender with high
broker user experience that is superior levels of customer satisfaction
to that offered by other lenders.
• While the use of online tools has become
the norm, LendInvest seek to optimise
each touch point.
• LendInvest offers brokers more control of Short Term Lender P2P Lender of
of the Year the Year
deal speed with transparency on
documentation requirements and a clear
Broker survey – April 2017 (61 responses)
indication on the timetable.
• Q. How likely are you to continue to refer
• Allowing a hybrid to provide application
business to LendInvest?
information online and offline helps
make the process frictionless. 1 10
• The interface between brokers and Not Likely Extremely Likely
LendInvest is user-friendly, with the ability
to easily track deals and support for mobile Overall score - 8.72
access.
• “Great product range, excellent IT systems”
• “You deliver quality products and a quality
service to all”
 Origination Forecasts – Funded Pool
Projected BTL origination volume (£m) – adjusted for seasonal variation
Packagers DAs Direct Running Book Total (RHS)

20 200

16 160

12 120

8 80

4 40

0 0
M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21
Months from launch of the BTL product

32
 Contents

Underwriting
 Credit Team
Roy Armitage FCIB, CeMAP, CeRergi
Head of Credit
• More than 30 years experience as a Senior
Mortgage Credit Executive for both Regulated
and Unregulated lending.
• Former Head of Risk & Compliance with specialist
buy-to-let lender Kensington Mortgages.
• Prior: Kensington Mortgages, JP Morgan, Halifax
Mortgages.
Underwriting Capacity
• Following launch of the BTL product, volume will increase to a run rate of c.10-15 cases per week with
an assumed conversion of 60% from application to offer.
• In the early stages of the product launch the existing team will absorb the volume, but LendInvest is
currently recruiting additional underwriting resource, which will be focused on buy-to-let experience.
• LendInvest’s underwriters are supported by 5 case managers.

Donna-Louise House Kynan Benjamin CeMAP Kaitlyn Pitt CeMAP Warren Perks Mark Foley
Underwriting Manager Underwriter Senior Underwriter Underwriter Senior Underwriter
• More than 17 years • More than 3 years Underwriting • 5 years Underwriting experience • More than 16 years Underwriting • More than 20 years
Underwriting experience in experience in Regulated and in Regulated and Unregulated experience in both Regulated Underwriting experience in both
Regulated, Unregulated, Unregulated lending. lending. and Unregulated lending. Regulated and Unregulated
Secured and Unsecured lending. lending.
• Former Underwriter at Masthaven • Former Underwriter for Dragonfly • Former Senior Mandated
• Former Mandated Lending Bank specialising in Regulated & Property Finance specialising in Underwriter for specialist lender • Former Investment Manager
Manager at Shawbrook Bank Unregulated Bridging & Heavy Regulated & Unregulated Bridging. GE Money Home Lending. for Heineken UK.
specialising in Regulated Bridging, refurbishments.
• Prior: Dragonfly Property Finance. • Prior: GE Money Home • Prior: Heineken UK, Lloyds Banking
Unregulated Bridging & Heavy
• Prior: Masthaven Bank, Lending, Central Trust, Black Group, Cheltenham & Gloucester,
refurbishments.
Shawbrook Bank, Halifax and Horse. Paragon.
• Prior: Shawbrook Bank, GE Money Barclays.
Home Lending, Ford Credit
Europe.

34
 Credit Oversight

• The process to be followed for BTL

Risk Appetite
will be identical to the successful
model employed for the short-
term property finance business. Underwriting Infrastructure

Credit
Underwriting
Controls
• The Credit Committee has overall
• Fraud mitigation (CIFAS,
responsibility for oversight. ID3, SIRA, CATO) • Individual mandates
• Exit assessment • Broker accessible
• Risk triggers • Case Manager support
• Concentration • Risk based decisions
• LendInvest is also regularly audited • Security centric • Not score driven
• Lending policy Lending policy
by external parties on behalf of • Exceptions reviewed
•

lenders under its existing funding

lines.
Constant
Review

• Audits
• Continuous improvement
• Training
• Arrears monitoring

35
 Key Lending Criteria
Category General terms Category General terms

Type Residential property only Repayment

Interest only
method

Limited companies or LLPs setup to hold & invest in real estate

Borrower Purchase
Professional individual borrowers
Purpose Re-mortgage – cannot be within 6 months of the previous purchase / re-
mortgage unless re-mortgaging from an existing LendInvest product
Full PGs required from all directors & shareholders holding at least 25% equity
Personal
in the company. LendInvest must be made aware of any other PGs provided by
guarantees
the directors & shareholders If a borrower’s aggregate BTL exposure with LendInvest reaches £5m then the
Exposure LTV is restricted to 65%
Tier 1 - UK/EU/EEA only. Must have been resident in the UK for past 3 years
Unlimited BTL loans with other lenders
Nationality Tier 2 - Non-EU/EEA possible with 3 year residential history & permanent right
to reside
£75,000 or £150,000 in London
Min valuation
HMOs - £150,000 or £300,000 in London
Age 21-85 (at end of term)

Valuation Full RICS valuation required

Charge First charge only

Houses
Geography England, Wales & mainland Scotland (excl. Highlands) New builds
Flats
Freehold Maisonettes
Leasehold flats & maisonettes must have at least 65 years remaining on the Included Apartments
Tenure property types HMOs - permitted for Tier 1 only, subject to additional requirements
lease at the end of the term
Commonhold is not accepted Ex-authority flats considered if in a privately owned block (Greater London only)
Flats in blocks <=5 storeys (must have lift if over 2 storeys)
High rise flats (>5 storeys) in Greater London accepted subject to market
Tenancy Single, assured shorthold tenancy (AST) or equivalent for up to 3 years
conditions

36
 Lending Criteria Comparison
Key Criteria Precise Mortgage Funding Towd Point Mortgage London Wall Series Fleet Offa No. 1 plc (Coventry Precise Mortgage Funding
LendInvest Paragon 24
2017-1B Funding 2016-Auburn 11 2016-1 (Fleet Mortgages) Building Society) 2015-2B
Closing date N/A Apr-17 Feb-17 Nov-16 Mar-16 Nov-15 Jul-15
Buy-to-let (%) 100 100 92.9 100 100 100 100
Adverse allowable? Yes (Tier 2 only) None in this transaction n/a No No No Yes
Bespoke scorecards
Bespoke BTL scorecard with
External credit Search supplied by credit Personal – Equifax – 320 developed with Experian
Equifax (RN4 + CATO data) Experian, Equifax n/a Equifax used for credit
scoring reference agency Corporate – Credit Safe – 30 which are monitored
history checks
continually
Applications received before 125%3 – single, self-contained
Minimum rental
See page 16 24/Dec/2016 - 125%; 115% 125% 125%2 properties 125%4
cover
After that - 125%-160%1 130% all other property types
80% up to £500k
80% up to £500k 90% up to £750k 80% up to £500k 80% up to £500k
Maximum LTV (%) 75% up to £750k
75% up to £750k 80% 85% up to £1m 75% 75% up to £1m 70% up to £1m
(BTL only) 70% up to £1m
75% up to £500k for HMOs 80% up to £3m 70% up to £2m 60% up to £3mn
65% up to £2m
Maximum loan £2m (at 60% LTV) £1m (£2m in aggregate £1m
£3m (£5m in aggregate) £500k £1m £1m single loan
size £1m (at 65% LTV) for HMOs to an obligor) (£10m in aggregate)
Minimum term 5 years Not stated 5 years 5 years 5 years 5 years Not stated
Maximum term 30 years 35 years 35 years 30 years 35 years 30 years 30 years
Corporate vehicles Yes (Private limited liability, Yes Yes
Yes Yes Yes No
allowed? reg. in England & Wales) (Private UK limited company) (Private UK limited company)
21 years old (max 85 at 18 years old (max 70 at 25 years old (max 85 at 18 years old (max 75 at 25 years old (max 85 at
Minimum age 25 years old 18 years old5
maturity) maturity) maturity) maturity) maturity)
Flats/maisonettes subject to Reinforced forms of poured Studio flats, Flats or
Leasehold with <70 years
statutory right to buy or shuttered concrete maisonettes in blocks
remaining, houseboats,
Unacceptable provisions, studios/bedsits, construction, steel clad exceeding 15 stories, mobile
See lending criteria n/a mobile homes, properties Not stated
property types freehold flats, flats above properties, LPS built concrete homes, houseboats, where
where building insurance
shops, steel framed, construction flats and commercial usage exceeds
cannot be arranged
commercial properties Maisonettes 20%
Tier 1 - UK/EU/EEA only. Must a) National of the UK
UK / EEA national, non-EEA
have been resident in the UK b) National of EEA member
national with permanent
Nationality for past 3 years c) Permanent rights to reside
rights to reside in the UK – 3 Not stated Not stated Not stated Individual – UK resident only
requirements Tier 2 - Non-EU/EEA possible in the UK
year UK residential address
with 3 year residential history b) and c) require UK
history required for all cases6
& permanent right to reside residency for past 3 years
Notes: Data above reflects eligibility criteria at the time of securitisation, other products/criteria may be allowed but not securitised
1Rental cover calculated using a stressed interest rate equal to the higher of pay rate, or revert rate +2%, at a minimum of 5.5%; 2 Rental cover calculated on a stress rate of 5% for LTVs below 65% or 5.5% for LTVs above 65%; 3 Rental cover
calculated on an interest only basis at the higher of product rate or reference rate (5% or 7% for BTL); 4 Rental cover calculated on an interest only basis at the higher of pay rate/reversion rate; 5 Current Paragon offering for BTL mortgages has
a minimum age requirement of 21 years; 6 Based on current criteria

37
 BTL Customer Profile
Profile of a typical BTL borrower
• Age 35 – 55
• Current owner occupier
• Existing landlord with multiple properties
• Wishes to expand portfolio
• Clean credit record in secured loans
• Full time or part time professional where rental income is their primary or secondary source
• Purchasing or refinancing through a corporate vehicle
• Requires a flexible approach not offered by the high street

Typical example of a bridging finance customer that would refinance into BTL
• Bridging borrower purchased run down 3 bedroom property below market value in Bournemouth – £400k valuation and £375k
purchase price
• 75% LTV loan of £281,250 over 12 months at 0.85% per month
• Required bridge to purchase and bring property up to letting standard
• Refinance exit assessed based on market rental yield when completed, at 125% of 5.5%
• Borrower exited with a BTL refinance after 10 months

38
 Underwriting Timeline
Initial Risk /
Property
Assessment
(1 – 2 days)
• Dedicated Case Manager completes
various credit, affordability and
AML/sanctions checks (Equifax) and
multiple anti-fraud checks (SIRA,
CIFAS) on the applicant
• FCA checks completed on the
broker
• Solicitor checks carried out per
criteria
• Underwriter reviews and provides
approval to proceed
• Further ad-hoc checks on
Rightmove and Zoopla
• Land Registry search completed
• Valuation instructed through Quest
via Panel manager (Connells)
• Hometrack AVM
39
Verification
of Property -
Valuation & Client
Documentation
(Day 7)
• Underwriter assesses the
valuation report and any
additional reports required to
confirm the information is
accurate and that LendInvest
is happy to lend
• Verification with LendInvest’s
in-house location exposure
tool
• Underwriter assesses the
client’s supporting
documents (e.g. bank
statements, income, evidence
of experience, serviceability)
• Underwriter provides
approval to proceed
2 week process
Final Underwriting
Checks & Due
Diligence
(Day 11)
• Final underwriting checks
completed
• Funding sign off obtained
from mandate holder
• Confirmation call - AML, KYC,
loan details confirmed with
borrower
Formal Offer issued
(Day 12+)
• Formal offer sent to borrower
/ broker and solicitor acting
Legals
(Day 13+)
• Solicitor prepares facility
documents
• Carries out searches and
other enquiries as required
• Submits any queries to
LendInvest underwriters
• Submits ROT and request for
funds
Funds Release
(Day 13+)
• Funds authorised for
release by Lending
Operations Manager
• Finance check authority
held, loan approval and
loan amount
• Finance check bank
account of solicitor via
Equifax bank account
verification tool and call
solicitor to check key facts
• Funds released
• Case status changed to
completed
• Case sent to Pepper via
overnight API
 Valuation
• LendInvest will normally obtain a valuation report via Connells based upon a physical inspection of the property, carried out by a suitably
qualified valuer who is a member of the Royal Institution of Chartered Surveyors (RICS) and on the LendInvest Valuers Panel. In Scotland
this may take the form of a Scottish Home Report (Single Survey).
• BTL portfolios will be normally valued by specialist valuers.
• The valuer carrying out this report must be familiar with the area that the property is located in (the property must be within 25 miles of
their permanent location).
• Valuation would be performed using the comparable method and would include all of the following:
• Valued on a current ‘as is’ basis, with no assumptions for anything other than the current status quo for the property;
• A 90 day valuation figure for the property;
• A market rental valuation for the property;
• An insurance reinstatement value for insurance purposes of the property, taking account of site clearance and VAT;
• Internal and external colour photographs of the property;
• Copy of current Professional Indemnity Policy if not already supplied;
• List of comparable evidence (providing at least 3 comparables); and
• The valuation must be carried out in accordance with the LendInvest Valuers Guidance Notes.

40
 Delegated Authorisation Limits (Bridging & BTL)

Title Position Max loan size Residential Security Commercial Security Pers App Non pers app

Christian Faes CEO £3m    

Ian Thomas Director £3m    

Roy Armitage Head of Credit £1.5m    

£750k (res)
Donna House Underwriting Manager    
£500k (com)

Mark Foley Senior Underwriter £250k    

Kaitlyn Pitt Senior Underwriter £350k    

Warren Perks Underwriter £250k    

Notes:
• All cases must be recommended by an underwriter prior to formal approval by the mandate holder
• Any loan >£3m must be signed off by two mandated individuals one of which must be a Director
• Any case that exceeds £5m and or 75% must be approved by the LendInvest Credit Committee
• Exceptions to Policy can be agreed by Ian Thomas, Roy Armitage or Donna House

41
 Contents

Collections
 Collections Process Map

On-boarding Pre-completion Post-completion Collections for First month arrears Second month Default
customer contact welcome letter performing arrears
mortgages

Third Party Servicing – Pepper UK

• LendInvest has appointed Pepper UK, trading as Engage Commercial (hereafter ‘Pepper’), as its third party servicer to undertake primary servicing and early arrears
servicing activities on all bridging and development loans (LendInvest’s existing short-term property finance business). Special servicing on these loans is currently
undertaken by LendInvest.
• Pepper is a leading third party servicer, managing over £8.0bn (as at Oct 16) of residential and BTL mortgages on behalf of international investors and UK retail banking
clients. It is backed by Pepper Group, an Australian consumer finance business, third party servicer and asset manager which has been operating for over 15 years.
• Partnering with Pepper will help LendInvest to scale up effectively – Pepper can help manage the growing loan book in the most efficient way and has capabilities in
both unregulated and regulated lending, meaning it can support LendInvest’s growth ambitions across its current and potential future products.
• Appropriate controls, SLAs and mandates are contractually agreed between LendInvest and Pepper to ensure appropriate handling of all LendInvest loans – this is
detailed in LendInvest’s Loan Servicing Manual.
• Pepper will undertake all activity through a ring-fenced team on a “white label” basis in order to appear as LendInvest at all times, ensuring the best customer journey.
• Buy-to-let Loans will follow a similar route but special servicing (i.e. servicing of later arrears and defaults) will be carried out by Pepper – however, any legal / LPA
action will only be taken with LendInvest’s consent (the Head of Credit and Servicing Manager would authorise such actions).
• Pepper use the Caseman system for loan servicing, which is in-house software linked to the Phoebus platform (a market-leading third party servicing platform).

43
 Pepper Servicing Team
Co-Head of Commercial Loan Servicing
Cindy Monk
• Over 20 years experience in commercial real estate lending.
Alison Higgs • Role is to lead a dedicated primary and special service CRE team to Director, Residential
support the Director of Commercial Loan Servicing. Loan Servicing
• Her role includes full responsibility for detailed loss minimisation and
exit analysis.

Senior Portfolio Manager

BTL AUM Matthew Parr
• Leads a team managing a portfolio of approximately £350m AUM
(90% NPL) with an average loan balance of £3m.
• Prior: Santander (SME lending team and business support),
Moorfields Corporate Recovery (re-structuring and insolvency
process).
£565m
Commercial Real
Estate servicing Senior Specialist
division • Extensive experience in mortgage based loan management, review of
Harrison Hay
financial documentation, personal guarantee/debt enforcement,
financial planning and relationship management.
£1.75bn • Prior: Bank of Queensland and Collection House.

Residential
servicing division
Specialist
• Areas of expertise include relationship management and client New BTL Servicing
Maryam Patel
servicing, back office support in commercial lending, KYC/AML, Specialists
portfolio management, origination and exit of loans.
• Prior: Metro Bank.

44
 Pepper Governance & Reporting
Governance Framework Pepper Reporting (monthly)

• Pepper operates under the remit of LendInvest’s Credit Committee. • Servicer Report
• The Head of Credit has primary accountability, and the Head of • Series of aggregations and stratifications to give a management
Servicing conducts daily oversight and communications. view of the pool progression.
• Monthly Oversight meetings are held and attended by: • Content of the report will be in an agreed reporting template.
• Head of Servicing at LendInvest; • Finance Report
• Head of Servicing at Pepper; • Bank reconciliation
• LendInvest Compliance representative; • Unreconciled items
• LendInvest Lending Operations Manager; • Advances breakdown
• Representative from Development Finance; and • Cash sweeps breakdown
• Technology representatives as required. • Retained interest breakdown
• Quarterly meetings are held at LendInvest between: • Expenses breakdown
• Head of Credit; • Collections
• VP of Compliance; • SLA Report
• Lending Operations Manager; and • Pool Tape
• Finance representative. • Pepper will supply a monthly Pool Tape containing a series of loan
level attributes.

45
 Arrears & Special Servicing
Arrears
• Pepper will initially monitor account payment records so that arrears will be identified within 2 working days of occurrence.
• Where possible, unregulated loans in arrears will be serviced in line with regulated loans.
• First Notice Letter:
Within 10 working days of the initial occurrence of a payment shortfall the borrower will be issued with the First Notice letter. This letter can be issued by email or post
and will contain a copy of their post completion letter and the Money Advice Service “Problems Paying Your Mortgage” booklet.
• Second Notice Letter:
Further contact will be attempted with the borrower through telephone and/or email. Within 15 working days of the arrears, if the arrears balance is still outstanding
or no agreement has been reached, then a Second Notice letter will be issued either by email or post enclosing a copy of the FCA Information Sheet on Arrears, a Tariff
of Mortgage Fees & Charges and a current mortgage statement. Further follow up contact will be made to try and resolve the outstanding payments until the account
reaches 3 months in arrears.
• Quarterly Statements:
Quarterly Statements will then be issued to all borrowers until such time that the arrears are repaid. Following the statement being issued with the Second Notice
Letter (or first if an agreement is reached), a statement will be issued to every loan in arrears during January, April, July and October every year.

Special Servicing
• On all BTL loans, if a second interest payment is not made, or the total payment shortfall is equal to or above two months interest, the account will enter special
servicing and be dealt with by the Pepper special servicing team.
• With an arrears balance equal to or greater than 3 months of interest the loan will be considered in pre-default and a review for the possible instruction of solicitors will
be considered in consultation with LendInvest.
• Where appropriate, Pepper / LendInvest will give consideration to resolving the borrower’s position by implementing forbearance options in line with the borrower’s
circumstances and the CML Buy-to-Let arrears statement of practice.
• Default definition: For the first three months Pepper and LendInvest work with the borrower to reach a payment agreement. If the loan becomes 3 months in arrears,
a notice of potential enforcement is sent (10 days after three months). If there is no response, LendInvest formally enforce 14 days after three months and at this point
the loan is declared in default. However, if the borrower is working with LendInvest, and the loan is 3+ months in arrears, LendInvest would not formally put it in default
as this is viewed as a measure of last resort.

46
 Recovery Process
• LendInvest will ensure that litigation action is only ever taken as a last resort, and only when all other options have been exhausted. Therefore, if the
loan account is in Default, a review must be undertaken by a member of the Servicing team who is fully aware of the facts of the case to consider if there
is a mutually agreeable proposal for the clearance of the arrears, or an exit strategy within a reasonable period of time.
• This review must be approved by the Head of Credit / Credit Committee prior to action being taken.
• In the case of unregulated Buy-to-Let (BTL) loans, if there is a case of immediate prejudice to either the property or to any occupant at the property,
litigation proceedings may be expedited. It is also recognised that it is sometimes in the interests of the tenants to act more quickly, for example if the
borrower has disappeared and cannot be traced.
• Any litigation action taken on a BTL loan will be done so with consideration to any tenancy agreement that is in place and whether that tenancy is
authorised.
• Any action will be taken in accordance with the relevant legislation and Receivers will not automatically be instructed following Default.
• If LPA Receivers of Rent (Receivers) are to be instructed, a Formal Demand must be issued by solicitors at least 10 working days before the
appointment of a Receiver can be considered. Once instructed the tenant and/or occupier will be informed of the appointment and its implications by the
instructed panel Solicitor. The LPA Receiver of Rent role would be undertaken by Pepper for BTL mortgages.
• The Receivers will communicate with LendInvest directly, but act under an “arm’s length” agreement as the Receiver will be the agent of the borrower and
not LendInvest. The Receiver will produce an exit strategy on the security property for LendInvest’s consideration and approval.
• Before bringing action for possession, LendInvest (or the appointed Receiver) will attempt to identify all tenants/occupants and the nature of their interest
in the property.
• Following possession of the property, the Receivers will liaise with LendInvest’s empanelled solicitors and the appropriate asset manager to ensure that
the security is disposed of in a timely manner, at the best price. The instructed asset manager will recommend if the property should be sold with or
without vacant possession to achieve the best return.

47
 Collections – Additional Processes
On-Boarding checks
• LendInvest is responsible for the quality of the data originated through the
application processing interface (API).
• Pepper is responsible for ensuring that the information has been accurately
reflected in Caseman (Pepper’s case management system) and reminders
are set in order to meet the agreed Primary Servicing Requirements as per
the information received via the API.
• Standard process controls are agreed around the following:
• Standard documentation to be received;
• System Generated Reminder requirements and diary reminders set up
(including 6 week Land Registry Check); and
• Third Party Authority details.
Communications
• LendInvest’s Case Managers are responsible for the initial contact with the
customer pre-completion. This will include an email validation process.
• Upon the origination of the mortgage in Pepper’s systems all customers will
receive a post completion Welcome Letter and be assigned a relationship
manager at Pepper.
• Pepper is responsible for all Primary Servicing activities – it will use email,
telephone and letters to establish contact with customers in order to discuss
their mortgage accounts.
• Pepper will record any indicators of vulnerability (NB: where a loan is in
arrears / default and potential vulnerability has been identified, it must be
reviewed by the Credit Committee before any litigation action is taken).
48
Payments
• Payments are required to be made monthly in advance, unless formally agreed
otherwise.
• The permitted payment method for BTL is Direct Debit only.
Record retention
• Upon the final redemption of a mortgage, Pepper will place the physical
mortgage file in an archive facility where it will be stored for 7 years from
the date of final redemption.
• All system based records on the mortgage servicing platform, the file of
scanned documents and any mortgage related call recordings will be held
for 6 years.
• This archived data will encompass the following arrears related
information:
• All dates of communications (including contact attempts) with the
customer once the customer’s account has been identified as being in
arrears;
• All communications (letters/emails/records of telephone calls) with the
customer in arrears and the case officer’s details;
• Information in relation to any new payment arrangements proposed;
• Any information in relation to third party engagement.
 Provisioning Policy & Write Off Process
• Loans which are identified as having suffered an impairment event are identified by the Credit Risk department, and listed the month before quarter-end.
Impairment events include:
• Where there is a default position equivalent to two or more missed monthly repayments and the LTV of the underlying security as at the current date
is 75%+ (and 80%+ for BTL);
• Where loans have accrued interest and the LTV of the underlying security is 75%+ (only applies to short-term property finance loans where interest
may be rolled up or retained);
• Where loan term has expired and the current LTV of the underlying security is 75%+ (and 80%+ for BTL) or there are other factors which provide
evidence of impairment;
• Where litigation proceedings have commenced;
• Where there has been an act of insolvency, e.g. bankruptcy, administration or liquidation, or appointment of an LPA Receiver; or
• Where there is evidence of fraud or a previously unidentified issue that adversely impact the loan.

• Current loan provisions are £1.44m on the loan book of £300m, based on a formal provisioning model that has been signed off by LendInvest’s auditors.

• Recovery action undertaken after a loan shortfall has been crystallised:

• Following sale of the security, if a net loss has been incurred, the case is passed to a DCA (currently Moorfields) for formalised shortfall debt recovery
– only if it is established that this recovery action has no chance of success will the loan shortfall be formally written off. During this period the
outstanding shortfall debt is included in the provisioning routine.
• The Head of Credit will submit a recommendation to the Credit Committee to write off any shortfall debt that cannot be pursued by the DCA.

49
 Contents

Financial
Performance
 Income Statement
2015 2016 2017 2018 2019 2020
YE’ 31 March (£’m)
Actual Actual Actual Budget Budget Budget

Revenue (gross) – based on Assets Under

13.7 31.8 40.3 56.0 86.5 131.4
Management, including off Balance Sheet

of which BTL N/A N/A N/A 1.1 6.7 15.6

Cost of funds 7.2 19.9 25.8 31.7 46.7 74.5

Gross profit 6.5 11.9 14.5 24.3 39.8 56.9

Gross profit % 47% 37% 36% 43% 46% 43%

Administrative expenses 3.2 8.5 14.4 16.2 20.2 24.2

Cost : income ratio 49% 71% 99% 67% 51% 43%

Profit from operations 3.3 3.4 0.1 8.1 19.6 32.7

Preference dividends, shareholder interest 0.0 (0.9) (1.1) 0.0 0.0 0.0

Profit before tax 3.3 2.5 (1.0) 8.1 19.6 32.7

Other Metrics

Loans Outstanding 126 231 325 522 908 1,508

of which BTL N/A N/A N/A 49 178 318

51
 Balance Sheet
2016 2017 2018 2019 2020
YE’ 31 March (£’m)
Actual Actual Budget Budget Budget

Loans to Borrowers 226.0 323.5 522.3 908.2 1,507.7

Other assets 4.4 3.4 7.6 6.9 6.1

Cash in hand and at Bank - Client funds 11.3 20.0 21.0 21.0 21.0

Cash in hand and at Bank - Restricted 0.0 0.2 1.8 1.8 1.8

Cash in hand and at Bank - own funds 11.0 1.9 5.1 22.5 51.0

Fixed assets 1.0 1.0 0.9 0.9 0.9

TOTAL ASSETS 253.7 350.0 558.7 961.3 1,588.5

Trade Creditors (funders) (238.0) (335.7) (537.5) (923.4) (1,522.9)

Other Creditors (6.3) (5.8) (5.8) (5.8) (5.8)

TOTAL LIABILITIES (244.3) (341.5) (543.3) (929.2) (1,528.7)

Share Capital & Premium 6.4 6.4 6.4 6.4 6.4

Retained Profits 3.0 2.1 8.9 25.6 53.3

TOTAL EQUITY 9.4 8.5 15.4 32.1 59.8

Note: LendInvest group reporting commenced for FYE Mar-16 so a group management balance sheet for FYE Mar-15 is not available

52
 Financial Performance
• The LendInvest group structure was formed in July 2015 and reports under consolidated IFRS accounting.

• The business doubled in FY 2016 reflecting the investment in origination infrastructure (teams, systems, broker relationships) co-
ordinated with significant new funding lines coming on stream.

• FY 2017 reflected significant investment in the marketplace lending infrastructure (technology build, regulatory, marketing) in H1 2017
resulting in H1 2017 loss from operations of £1m. H2 2017 profit from operations was just over £1m reflecting strong lending growth
from new product launches as well as a return towards normalised OpEx spend.

• FY 2017 also saw the repayment of LendInvest’s Series A investment from Kunlun, resulting in the associated payments of preference
dividends / shareholder interest stopping in March 2017.

• FY 2018 starts the year with a strong loan book of £325m which, together with a strong lending product suite, returns the group to high
year-on-year growth in loan book revenue and profit from operations. Increased lending in longer term products (particularly
development finance and BTL) will support faster loan book growth going forward.

• OpEx growth is more modest, reflecting the discontinuance of marketplace lending one-off costs and the scalability of LendInvest’s
technology and servicing infrastructure across a larger revenue base.

53
 Availability of Equity
• The group currently has net worth of £8.5m, of which £6.5m is currently invested in fixed assets, working capital and funding lines, leaving
cash of approx. £2m.

• LendInvest plans to restructure its investments in working capital and funding lines (which include loans currently funded by equity that
can instead be funded from alternative sources) to provide £2.5m for the BTL equity requirement, which would be sufficient to cover the
initial equity requirement for the BTL funding line over the first 9 months (up to a £50m loan book).

• LendInvest is also currently in the process of raising equity from interested parties. While at very early stages, it is clear what the raise is
for, with the process already having been kicked off with numerous parties interested, under NDA and in Data Rooms.

• Furthermore, LendInvest has received a commitment from an existing equity partner that sufficient funds will be available to fund the
equity in the funding line, to support the growth of the BTL product.

• FYE Mar-18 profit before tax is forecast to be £8.1m and FYE Mar-19 profit before tax is forecast to be £19.6m. The remainder of the
equity requirement to achieve a £200m BTL book is therefore forecast to be available through retained profits.

• LendInvest can confirm that none of the BTL equity contribution will be raised through the online investor platform.

54
 Contents

Portfolio
 Dummy Pool (Tier 1 & Tier 2)
• LendInvest will originate a portfolio of 1st charge BTL mortgages distributed across the UK. In the modelled pool, 88% of mortgages have
an LTV below or equal to 70%, with the ICR ranging from 115% to 165%.

7% Regional concentration Fixed rate period (years)

2%
30% 3%
27%
4%
North West West Midlands 24% 2

5% Scotland North East

3
2% Yorkshire and the Humber East Midland
4% 4
South West Wales
1%
East of England London 5
7% South East
25% 24%
35%

LTV distribution ICR distribution (LendInvest calculation)

50% 35%
30%
40%
25%
30% 20%
20% 15%
10%
10%
5%
0% 0%
60% 65% 70% 75% 80% <125% 125% 135% 145% 155% 165%

56
 Portfolio Composition Comparison
Key Criteria LendInvest - Project Precise Mortgage Towd Point Mortgage London Wall Series Fleet Offa No. 1 plc (Coventry Precise Mortgage
Paragon 24
Spring Dummy Pool Funding 2017-1B Funding 2016-Auburn 11 2016-1 (Fleet Mortgages) Building Society) Funding 2015-2B

Closing date n/a Apr-17 Feb-17 Nov-16 Mar-16 Nov-15 Jul-15

Buy-to-let (%) 100 100 92.9 100 100 100 100

Total issuance (£) n/a 484,523,517 1,000,000,000 237,946,422 474,360,364 350,110,956 224,200,000

WA OLTV (%) 64.8 72.0 82.3 67.6 54.8 73.2 72.3

WA ICR (%) (BTL only) 76.0 (Tier 1) / 75.2 (Tier 2) 82.2 141.4 n/a 130.7 84.6 82.2

WA seasoning (months) n/a 5.0 108.0 8.8 58.4 4.0 2.2

WA remaining term to maturity 1

17.5 22.0 14.0 19.7 13.6 27.7 20.0
(years)

WA stabilised margin (%) 4.6 (Tier 1) / 4.7 (Tier 2) 3.5 1.2 4.3 3.7 4.7 4.2

Number of Borrowers n/a 1,940 5,812 816 4,175 1,867 1,292

Average current balance per

299,591 249,754 172,597 290,233 110,882 186,143 173,704
borrower (£)

Top 20 loans equal to Top 20 borrowers make up 1,447 loans exceed £210k Top 20 borrowers make up 58 loans exceed £400k 3 loans exceed £750k 14 loans exceed £600k
Large loan concentration
12.15% of the pool 5.99% of the pool (27.47%) 7.39% of the pool (6.52%) (0.90%) (5.09%)

GL/SE concentration (%) 64.8 74.0 40.1 80.0 57.2 55.8 64.6

Geography – largest region (%) London – 35 South East – 43 South East - 23 London – 42 London – 39 London – 38 London – 49

Fixed % (including teaser rate) 100 43.0 0.0 65.8 39.3 89.2 52.8

Interest-only loans (%) 100 95.4 98.7 95.3 78.0 93.3 94.6

BTL CCJs (%) 0.0 (Tier 1) / 100 (Tier 2) 0.0 0.0 0.0 0.0 0.0 0.0

IVA/bankruptcy (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Arrears (%) 0.0 0.2 1.6 0.0 0.0 0.0 0.0

Notes: Data above reflects eligibility criteria at the time of securitisation | ¹ Legal final maturity

57
 Indicative Credit Enhancement Analysis
• LendInvest has modelled the dummy pool using Fitch’s Resi EMEA • LendInvest used target levels for key parameters to generate an
Gross Loss model: indicative pool, such as geographical concentration, LTV and ICR
Tier 1 product distribution.
• The following additional assumptions were made:
AAA AA A BBB BB
• Loans in the <125% ICR band assumed to all be at 115% ICR
WA CE 14.4% 10.8% 7.2% 4.4% 2.3%
• 1st charge only
WA FF 20.2% 16.3% 12.1% 8.2% 4.9%
• No first time buyers
WA LS 71.1% 66.3% 59.3% 54.5% 47.5%
• Distributed equally between tenor of 5, 10, 15, 20, 25 and 30 years
WA MVD 69.8% 66.5% 63.3% 60.0% 56.8%
• Full valuation for all loans
WA RR 43.9% 48.7% 53.6% 58.4% 63.2%
• Property type: “Other” (median adjustment per Fitch criteria)
Tier 2 product • No bankruptcy / IVA and CCJs for Tier 1 product
AAA AA A BBB BB • No bankruptcy / IVA , no unsatisfied CCJs and 1 satisfied CCJ (£5k)
WA CE 34.7% 27.3% 20.6% 14.8% 9.2% 12 months ago for 100% of loans in the Tier 2 pool

WA FF 48.4% 40.7% 34.4% 26.7% 19.1% • 1.0x multiple for originator quality

WA LS 71.8% 67.0% 60.0% 55.2% 48.3% • LendInvest modelled the Tier 1 product as prime and Tier 2 product as
non-prime (Fitch collateral assumption).
WA MVD 69.8% 66.5% 63.3% 60.0% 56.8%
• The key output from the modelling is that the indicative single A
WA RR 43.5% 48.2% 53.0% 57.8% 62.6%
credit enhancement level for Tier 1 is 7.2% and for Tier 2 is 20.6%.

58
 Contents

Funding
 Senior & Mezzanine Funding Requirement
• Initial financing requirement of £50-75m, increasing to c.£200m over the next 24 months.
• Achieving a 95% advance rate is a key target for the financing.
• Sufficient equity is available for the remaining 5% in the initial financing requirement, and further equity will be raised if required to
support growth to the target book size (see overleaf).
• LendInvest would also be interested to understand how your institution could support with a public securitisation in the medium term.
• Please see the Appendix for Heads of Terms proposed by LendInvest.

Senior Projected facility utilisation (£m)

Funding Funder
Running Book Total Senior Debt Mezzanine Debt
Interest & principal
Sale of loan + collections
Originator 200
Excess spread SPV ABS intercreditor terms 175
(LendInvest)
150
Interest & principal 125
Originate
loan Collections 100
Funding Mezzanine 75
Funder 50
25
0

Mortgages Months from launch of the BTL product

60
 Contents

Timetable
 Indicative Timetable
Week Commencing 15 May 22 May 29 May 05 Jun 12 Jun 19 Jun 26 Jun 03 Jul 10 Jul 17 Jul 24 Jul 31 Jul 07 Aug 14 Aug

Workstream Responsibility 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Hold management presentations LI, EY, Funders

presentations
Management

Further information provision to funders EY

Q&A process (managed by EY) EY, LI

Stage 1 credit approval obtained and term sheet provided to LI Funders 24th

Select preferred funder(s) LI, EY, Funders

approval of selected funder(s)

Agree scope and timing of pre-lend due diligence with selected funder(s) LI, EY, Funders
Due diligence and credit

Meetings at Global ABS LI, EY, Funders 7th

Site visits of selected funder(s) LI, EY, Funders

Q&A through the credit process LI, EY, Funders

Full credit approval subject to documentation Funders

Credit approved term sheet provided to LI Funders

Legal DD Lawyers, LI

Drafting of legal documentation Lawyers

Negotiate final terms and legal documentation Lawyers, EY, LI, Funders
Signing

Finalise any other documentation Lawyers, EY, LI, Funders

Deal signing LI, Funders

62
 Contents

Proposed Data
Provisioning
 Proposed Data Provisioning
• Full BTL lending criteria
• Example of standard security documents
• Lending Policy Manual
• Servicing Manual
• Example of Servicing Report from Pepper
• 2016 Annual Report of LendInvest (containing FY15 and FY16 audited financials)
• Financial forecast model to FY20
• Dummy pool

64
 Contents

Appendix:
Heads of Terms
 The Facilities
Borrower Newco SPV incorporated in England and Wales

Initial senior and mezzanine revolving credit facilities of [£50-75m], with an uncommitted accordion option
Total Facilities
to increase to £200m, which may be exercised up to [5] times during the Revolving Period

85%, or at single A rating if lower (determined using a pre-agreed dynamic credit enhancement model such
Senior Advance Rate
as Fitch Resi EMEA) – for the avoidance of doubt, the facility will not be externally rated

Mezzanine Advance Rate 95%

Inter-creditor Terms Market-standard ABS inter-creditor terms

Revolving Period [36] months

First 5% (of total initial facilities) of mortgages funded by equity and the mezzanine facility, then drawn
Drawings
amounts under the senior and mezzanine facilities to be in line with the advance rate calculation above

Weekly, subject to minimum drawdown of [£250,000] under each facility (or, if less, the available
Frequency of Drawdowns
commitment)

To be discussed – LendInvest would be interested to understand your proposed pricing for a floating-to-
Hedging
fixed swap, both day 1 and for any future adjustments to the notional amount to reflect actual utilisation

66
 Concentration Limits & Drawstop Events
Concentration Limits Test Level Drawstop Events * Test Level

Tier 2 loans [25]% Average loan size > £[300]k

Loan size > £750k [25]% Weighted average ICR < [125]%

Single region (excl. London and Scotland) [30]% Weighted average indexed LTV > [75]%

Loans > 3 months in arrears (including

Properties in London [40]% > [2.0]%
repossessions)
Loans > 2 months in arrears (including
Properties in Scotland [5]% > [2.5]%
repossessions)

Original LTV > 75% [10]% Excess spread < [●]%

ICR < 125% at origination [30]%

* May be cured within 90 days of occurrence by sale of new assets into the SPV

67
 Eligibility Criteria
• To incorporate the product / lending criteria
• No consumer BTL
• Full property valuation
• Verification of rental income
• No further advances / product switches
• Either (i) the first payment under the loan is not yet due, or (ii) the first payment due date has occurred and the
first payment has been received from the borrower
• Loan is less than 2 months in arrears
• Loan is not in Default
• Amounts in excess of the Concentration Limits will be ineligible

68
Disclaimer
The contents of this presentation document (“Presentation”) do not constitute and should not recommendation, to acquire or dispose of any investment or to engage in any other transaction,
be construed as constituting any form of offer or binding commitment on the part of LendInvest or to provide any investment advice or service.
Limited (“LendInvest”).
You should not act or refrain from acting upon any information contained on it without seeking
The information contained herein does not constitute an offer to sell or a solicitation of an offer appropriate professional advice. This Presentation is not intended to provide and should not be
or a recommendation to purchase securities under the securities laws of any jurisdiction, relied on for accounting, legal or tax advice, or investment recommendations.
including the United States Securities Act of 1933, as amended, or any US state securities law, or
This Presentation and any other information or opinions supplied or given to you by LendInvest
a solicitation to enter into any other transaction
constitute confidential information. Neither the whole nor any part of the information contained
No representation or warranty, express or implied, is or will be made in respect of the in this Presentation may be duplicated in any form or by any means. Neither should the
information contained in this Presentation and no responsibility or liability is or will be accepted information contained in this Presentation, or any part thereof, be redistributed or disclosed to
by LendInvest in this regard. In particular, but without prejudice to the generality of the anyone without the prior written consent of LendInvest. Where you have entered into a non-
foregoing, no representation or warranty is given as to the accuracy, completeness or disclosure agreement with LendInvest, you must comply at all times with the terms of such
reasonableness of any projections, targets, estimates or forecasts contained in this Presentation agreement.
or in such other written or oral information that may be provided by LendInvest.
By viewing this Presentation, you agree to be bound by the foregoing limitations.
All liability is expressly excluded to the fullest extent permitted by law.
Neither this Presentation nor any part of it forms the basis of or can be relied upon in
This Presentation is exempt from the general restriction in Section 21 of the Financial Services connection with any contract or commitment to purchase any investment.
and Markets Act 2000 on the communication of invitations or inducements to engage in
LendInvest Limited is authorised and regulated by the Financial Conduct Authority under interim
investment activity on the grounds that it is made only to investment professionals, as defined
permission 658890 for consumer credit activities. LendInvest Limited is a limited company
in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.
registered in England and Wales (No. 8146929) with registered office Two Fitzroy Place, 8
This Presentation may contain forward-looking statements, which involve risks and Mortimer Street, London, W1T 3JJ. LendInvest Limited is registered with the Information
uncertainties. Actual results may differ significantly from the results described in such forward- Commissioner‘s Office (Reg No. Z3287074)
looking statements. Any past performance information contained in this Presentation is
provided for illustrative purposes only and is not a guide to future performance and the value of
investments may fall as well as rise.
In particular, investments in the technology sector can involve a high degree of risk and
investors may not get back the full amount invested.
This Presentation should not be construed in any circumstances as a solicitation or offer, or