Selina Finance secures £110.82 million Series B investment led by Lightrock
- Series B
Safiya Marzook
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FINTECH, SELINA RAISES $150M IN SERIES B FUNDING TO BRING HELOC TO UK HOMEOWNERS
Selina Finance, the UK’s first Home Equity Line of Credit (HELOC) fintech, has raised a total of $150 million in its Series B funding. The round was led by Lightrock, a global private equity platform, with existing investors also participating to raise $35 million in equity. In addition, $115m in debt was secured from Goldman Sachs and GGC to fund further expansion as Selina builds towards a first public securitisation.
Selina was founded in 2019 and gained regulatory approval for consumer lending in 2020. Since then, the company has already made over $100 million of loans with the HELOC product in the UK, which has shown strong early adoption by UK homeowners.
In the UK, homeownership is widespread and the largest source of wealth worth trillions to consumers. Selina Finance is first to market with a HELOC (Home Equity Line of Credit) that enables homeowners to unlock the value in their homes with a multipurpose facility by borrowing against their equity at low interest rates with a flexible line of credit, only paying for the funds that they use. Widely used in the US where the market is valued at $150 billion annually, Selina has brought HELOCs to the UK to offer homeowners a new way to fund home improvements or other large purchases without the cost and inflexibility of traditional loans or having to remortgage.
Selina leverages technology to create a digital-first customer experience that is fast and seamless compared to traditional lenders, and combined with the low rates of secured lending aims to unlock the $30 billion market opportunity in the UK. Selina sees the UK property market as having a huge potential for HELOCs with many homeowners having a sizable amount of equity in their home, strong credit history and a stable income. Selina Finance has calculated using official figures that more than half of UK households could benefit from its HELOC3.
Selina believes that accessing the wealth locked in a home should be as easy as using a credit card, where customers can draw down on their line of approved credit within minutes using their phone. Selina plans to launch a card product in 2022 to put the HELOC into people’s pockets and make it more accessible for purchases.
The launch of new products comes at a time when UK homeowners have considerable home equity, strong credit performance and stable incomes but face inflexible mortgage products and still have to rely on costly credit cards and personal loans to fund expenditures such as private education, medical bills and home improvements.
Hubert Fenwick,Co-founder and CEO, Selina Finance, commented:
“We expect demand for HELOCs to rocket in the UK over the next five years as they become the first choice of finance for UK homeowners, our early traction shows the huge potential that exists in this market. HELOCs offer a new way for homeowners to finance and advance their lifestyle; perfect for those who have worked hard to build up equity in their property, enabling them to benefit by borrowing affordably and responsibly. A HELOC is the best hybrid between a mortgage and a credit card; it’s as affordable as a mortgage and as flexible as a credit card.”
Leonard Benning, Co-founder and COO, Selina Finance, commented:
“European consumers are structurally under-served and homeowners cannot access their wealth in an affordable or flexible way with existing products. With the UK being Europe’s most dynamic market in fintech, it was the perfect place to launch HELOCs and validate the pent-up demand. UK consumers are always early adopters of new finance products, they have embraced the advantages of leading fintechs like Revolut and price comparison sites such as MoneySuperMarket, and we are confident that UK consumers will see the benefits of HELOCs and adopt them too.”
Ash Puri, Growth Investor, Lightrock, commented:
“Historically, homeowners across the UK have been underserved when it comes to accessing wealth created from their largest asset – their home. Selina’s disruptive lending model allows consumers to unlock previously inaccessible capital, whilst having the flexibility to utilise the lending facility and return as per convenience. The team at Selina have achieved impressive growth with over $100m in loans issued since founding in 2019. Lightrock is delighted to be backing such an innovative team and looks forward to supporting Selina as it disrupts traditionally inflexible lenders.”
Anna Montvai, Executive Director, Goldman Sachs, commented:
“Selina Finance’s HELOC product is innovative, and bridges the gap between the consumer credit and mortgage markets. We are excited to support the Selina Finance team in the growth of their business and loan portfolio.“
[Ends]
Notes to editors
In July 2020, Selina Finance completed a £42 million Series A fundraise. £12 million in equity and £30 million in debt to distribute as loans.
1In the US, the HELOC is a $150 billion market and a conservative value based on the US market applying property values and per capita to make it equivalent to the UK values it at $30bn
Selina calculations based on the median house price in England is £259,000 (2020 Q4) so 50% of residential properties in England are worth more than £259,000
14.8 million owner occupiers households in England in 2017-2018 (owned their home outright or bought with a mortgage)
At least 50% of households in England have a property worth over £259,000 which represents 7.4 million households potentially benefiting from Selina Advance.
Research from Selina Advance, found that in the last year, over half (55%) of all British homeowners made improvements to their home, rising to almost two-thirds (61%) of people with net assets of £250,000+.
More than a quarter of homeowners (26%) used credit to fund their home improvements (22% used unsecured credit such as a credit cards or loans and 9% remortgaged), rising to 34% among those with net assets of £250,000+ (28% used unsecured credit such as cards and loans and 13% remortgaged).
About Lightrock
Lightrock is a global private equity platform that backs purpose-driven entrepreneurs tackling the world’s biggest challenges. Since 2009, Lightrock has invested in companies that pursue scalable and tech-driven business models around the key impact themes of people, planet, and productivity/tech for good. Lightrock’s portfolio includes more than 70 high-growth companies in 14 countries across Europe, the USA, Latin America, Asia and Africa. Lightrock has a global team of more than 70 private equity professionals based in London (headquarter), Zurich, São Paulo, Nairobi, and Bangalore.
www.lightrock.com
About Selina Advance
Leonard Benning and Hubert Fenwick founded Selina in 2019. They have worked for Bain & Co, Bain Capital and McKinsey. The leadership team is highly experienced in Fintech and digital marketplaces such as MoneySuperMarket, as well as blue chip financial services expertise from JP Morgan and the Barclays Group.
Selina Advance is a consumer product of Selina Finance Limited which is a company regulated by the Financial Conduct Authority (FCA). Selina is a responsible lender. It looks very carefully at affordability and markets this product to the right customers who can afford it, namely homeowners with equity and good credit scores and above average incomes. Its acceptance criteria and lending policy covers this. Selina’s team is based in London and brings together decades of experience in financial services.
For more information visit www.selinaadvance.com
How does the Selina Advance HELOC work?
Selina is using its leading fintech to ensure the application process puts the customers first. Homeowners can apply for a Selina Advance HELOC via the website or on their phone. Customers will get a personalised quote in two minutes and can then apply for a full application online in only 30 minutes. In addition, Selina Advance offers a personal adviser service.
Homeowners will then receive a multi-purpose personal line of credit. They can get access to this money when they need it and only pay interest for what they use. Homeowners are able to borrow between £25,000 up to £1 million with an APRC representative of 4.96% (rates starting at 3.95%) and terms ranging from five to 30 years.
For example, if you had a personal line of credit of £200,000 you could decide to build a home extension for £120,000 in year one. And if it ran over budget by £30,000 you could simply draw down the additional
funds only paying interest when you do this. Then in years 2-5 you can decide to spend the remaining sum or repay back with no early repayment charges (no ERCs apply even after the five year period).
The HELOC is flexible and multipurpose so customers can draw down on their line of credit as and when needed via the Selina Advance app without having to re-apply. The Selina Advance HELOC sits alongside a mortgage and does not affect your current mortgage.
The HELOC has a range of LTV which will soon increase to 85% and customers will be able to select fixed or variable rates. They will only pay for what they use from their line of credit so the repayments can vary. Fixed rates are for two or five years.
Selina Finance is a start-up digital lender offering a highly automated platform. Advanced proprietary technology powers the valuation and underwriting process, enabling loans without the need for property surveyors or other face-to-face visits. There is only a one-off £995 product fee that can be included in the monthly repayments. There are no property valuation, conveyancing or broker fees.
