sancus bms group · the uk is at the centre of the european alternative finance sector, which grew...

18th July 2017

Sancus BMS Group

Sancus (Isle of Man)

Mike Hennessy & Andrew Whelan

This document is confidential and should only be circulated with prior approval from Sancus BMS Group.2 | 11/07/2017

Your hosts

Andrew Whelan – CEO, Sancus BMS GroupChartered Fellow of the Chartered Institute for Securities & Investment

Andy’s career has spanned over 30 years, including tenures with some of the largest

investment houses, including Morgan Grenfell and Kleinwort Benson.

He was a founding partner of Ermitage Group, during which time he won multiple investment

awards.

Andy has been recognised in the Citywealth Leaders list since 2007.

Mike Hennessy – Managing Director, Sancus (IOM)Fellow of the Institute of Financial Services

Mike has been based in all three Crown Dependencies (Jersey, Guernsey and Isle of Man)

throughout his financial career.

Following 26 years in senior positions at HSBC and prior to joining Sancus he was Head of

Banking for Kleinwort Benson.

Mike is well known on the island through his links with the Isle of Man Chamber of

Commerce.


Agenda

The Sancus BMS Group (AW)

The evolution of alternative finance (AW)

Benefits for IOM Borrowers and Funders (MH)

The future for alternative finance (AW)


A profitable niche lending business operating different funding solutions in multiple jurisdictions.

Corporate Structure

Sancus BMS Group

JerseySancus (Jersey) Ltd

Company No. 113391

GuernseySancus (Guernsey) Ltd

Company No. 58612

GibraltarSancus (Gibraltar) Ltd

Company No. 112755

UK

Sancus Finance Ltd

Company No. 7485900

BMS Finance (UK) SARL

Company No. 06008835

IrelandBMS Finance (Ireland)

SARL

Company No. 905187

Isle of Man*Sancus (IOM) Ltd

Company No. 012528V

*Affiliate

Total staff 39**

** As at 31/12/16


Sancus Group Overview

*Excluding Sancus Finance (estimate)

Data source: Sancus Group as at 31/12/16

£578mCumulative Loan Book

£162mInvoice Discounting

Supply Chain Financing

£274mAsset Backed Loans

£142mBusiness Loans

£30mProprietary Capital

£3m*2016 Profits

Ireland Strategic Investment Fund

is an investor in

BMS Finance (Ireland) SARL

British Business Bank

Investments Ltd

is an investor in

BMS Finance (UK) SARL £152mLive Loan Book


Our Funding Solutions

Short Term/Ongoing

(1 to 3 months)

Invoice Discounting

Supply Chain Finance

Medium Term

(3 – 24 months)

Asset Backed Loans

Property Bridge

Property Development

Long term

(24 – 60 months)

Intellectual Property

Mergers & Acquisitions

Cash Flow

Mezzanine


Traditional Banking versus P2P

Government Endorsed

Attractive Rates

Convenient

• Cost Inefficiencies

• High Margins

• Restrictive Lending

Lenders and Borrowers share the margin that banks traditionally captured

Lower Rates

Traditional Banks

Sancus BMS Group

Costs

and

Margins

Costs

and

Margins

Margin

&

Costs

Margin

&

CostsBetter Returns

Depositor

Borrower

Borrower

Lender


Total Quarterly P2P Cumulative Lending (UK estimate)

2.272.7

3.283.91

4.67

5.5

6.42

7.25

8.13

9.18

0

1

2

3

4

5

6

7

8

9

10

Q32014

Q4 Q12015

Q2 Q3 Q4 Q12016

Q2 Q3 Q4

£ b

illio

nTotal amount lent to individuals/firms at the end of each period

Total Cumulative Lending

Cumulative Business Lending

Cumulative Consumer Lending

Source : University of Cambridge Judge Business School


How does the Sancus model work?

Sancus use their own capital to underwrite loans then syndicate the loan out to their pool of Co-Funders.

The benefits are:

We can change the shape of credit risk for Co-Funders;

We Co-Fund in every deal to control the process;

We share risk with Co-Funders and have “skin in the game”;

We have the ability to subordinate to Co-Funders to reduce their risk;

We demonstrate complete confidence in our credit process.


A straight forward process which provides:

Certainty - commitment if borrowers meet clearly defined approval process criteria;

Reliability - speed & efficiency of service;

Simplicity - terms can be customised to suit individual borrower requirements;

Transparency - on both costs and reporting;

Trust - in a relationship business you know who you are dealing with;

Flexibility - ability to repay early if circumstances change;

Opportunity - access to capital in more complex situations than traditional lenders can cope with.

The Benefits for Borrowers


A straight forward process which provides:

Diversification – via a low correlation to traditional asset classes with returns in excess of those from bonds and cash;

Control – Funders can choose the type of opportunity they wish to allocate to;

Simplicity – secured participation in a hassle free way with transparent reporting;

Trust – in a relationship business you know who you are dealing with;

Flexibility – ability to repay monies if circumstances change and interest paid monthly if required;

Impact – assisting the real economy, making a real difference in your local jurisdiction.

The Benefits for Co-Funders


Borrower Characteristics

What we look for in our borrowers, the six “C”s:

Character – strong moral fibre;

Capital – holistic approach to understanding a borrower’s total net-wealth;

Collateral – what is our security;

Cover – a sensible Loan-to-Value (LTV);

Capacity – ability to repay and clear repayment strategy;

Conditions – economic scenarios to understanding impact.


The Future of Alternative Finance – some facts

What is happening in the altfi space?

The UK is at the centre of the European alternative finance sector, which grew 84% in 2016 (Nesta);

The UK alternative finance sector is expected to be worth £12.3 billion by 2020 (Fiserv);

52% of owners are now aware of financing beyond traditional banking;

68% of SMEs are planning on taking out business finance in 2017 (Liberis);

25% of small firms that apply to banks have their loan application rejected (British Business Bank);

Business overdraft lending by banks is down 50% in four years (Kingston Smith Accounting Firm).


What about Brexit?

Political and economic uncertainty

What we have seen so far

£ weakened against $ and €;

Some real estate has declined in value;

UK downgraded by several credit agencies;

Disruption in the ability of UK banks to access funding.

What could happen

Slow growth in UK;

Imported goods more expensive;

UK may create its own path in regulation of

domestic financial services;

Significant uncertainty.

What does it mean for Alternative Finance?

Banks still retreating from financing SMEs, more opportunities for borrowers;

Short term funding opportunities more attractively priced;

Lack of investment opportunities elsewhere makes alternative finance more

attractive for funders.


Straightforward to deal with;

Speed and certainty of execution;

Pragmatic application of common sense;

Highly experienced credit team in multiple jurisdictions;

Ability to review complex scenarios.

Conclusion


Contact Details

Richard WhitehouseSales Director,

Sancus Finance

e [email protected]

t +44 (0) 3301 003636

Callum ScottRegional Director, South

Sancus Finance

e [email protected]

t +44 (0) 1256 657852

Michael HennessyManaging Director,

Sancus IOM

e [email protected]

t +44 (0)1624 604101

Simon BrownManaging Director,

Sancus Guernsey

e [email protected]

t +44 (0)1481 713335

Stuart HamiltonBusiness Development Manager,

Sancus Jersey

e [email protected]

t +44 1534 708902

Stephen HouseBusiness Development Manager,

Sancus Jersey

e [email protected]

t +44 1534 708908

Stephen O’BrienManaging Director,

Sancus Gibraltar

e stephen.o’[email protected]

t +350 200 13702

Lino BrydgesBusiness Development Manager,

Sancus Gibraltar

e [email protected]

t +00 350 200 13705

Shane LaniganManaging Director,

BMS Finance UK & Ireland

e [email protected]

t +44 (0) 20 7092 6700 (UK)

t +353 (0) 1 477 3272 (Ireland)Rachael BajardBusiness Development Manager,

Sancus IOM

e [email protected]

t +44 (0)1624 604104

Peter HudsonDirector, Property Finance

Sancus Finance

e [email protected]

t +44 (0)1256 898000


Important Information and Disclaimer

Legal Disclaimer (page 1 of 2)

This Presentation (this "Document") relates to Sancus BMS Group Limited (the "Company") and its subsidiaries (the "Group") and has been delivered to you (a "recipient") for

information only. This Document does not constitute an offer or invitation to subscribe for shares or other securities issued by the Group, is not capable of acceptance by any recipient

and shall not form the basis of any contract or other arrangement between any member of the Group (or any other person) and any recipient (in any jurisdiction). Without prejudice to

the generality of the foregoing, the issue of this Document shall not be deemed to be any form of commitment on the part of the Company or the Group (or any other person) to

proceed with any investment.

The information in this Document, which does not purport to be comprehensive, has been provided by the Company and has not been independently verified.

Whilst this Document has been prepared in good faith, no representation, warranty or undertaking, express or implied, is or will be made, and no responsibility or liability is or will be

accepted by the Company or by any of its officers, employees, agents or advisers, in relation to the accuracy or completeness of this Document, the information contained in this

Document or any other written or oral information made available to any interested party or its advisers in connection with this Document, and any such liability is expressly disclaimed.

In particular, but without prejudice to the generality of the foregoing, no representation, warranty or undertaking is given as to the achievement or reasonableness of any future

projections, management estimates, prospects or returns contained in this Document or in such other written or oral information. Each recipient acknowledges and agrees by

accepting this Document that no person has, nor is held out as having, any authority to give any statement, warranty, representation, or undertaking on behalf of the Company. The

foregoing provisions of this paragraph shall not limit the liability of any person in respect of fraud or otherwise as prohibited by applicable laws.

The Company gives no undertaking to provide any recipient with access to any additional information or to update this Document or any additional information, or to correct any

inaccuracies in it which may become apparent.

Any recipient of this Document should note that this Document does not constitute an offer to the public to subscribe for securities in any member of the Group and has not therefore

been approved by any regulatory authority anywhere in the world.

Sancus (Guernsey) Limited is a non-regulated financial services business under the Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008

as amended by the Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008 (Amendment) Ordinance, 2008. This law has no effect on the

conduct of business of Sancus (Guernsey) Limited except for the requirement to carry out certain measures in connection with anti-money laundering and combating the financing of

terrorism measures in accordance with the guidance issued by the Guernsey Financial Services Commission from time to time. Sancus (Guernsey) Limited is also registered with the

Guernsey Data Protection Commissioner under the Data Protection (Bailiwick of Guernsey) Law 2001.


Important Information and Disclaimer

Legal Disclaimer (page 2 of 2)

Sancus (Jersey) Limited is registered with the Jersey Financial Services Commission under the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 to carry out the business

of providing lending services, including consumer credit, mortgage credit, factoring (with or without recourse) and financing of commercial transactions (including forfeiting). As a

result of this registration Sancus (Jersey) Limited is required to comply with certain procedures to prevent and detect money laundering in accordance with the guidance issued by

the Jersey Financial Services Commission from time to time. Sancus (Jersey) Limited is also registered with the Jersey Data Protection Commissioner under the Data Protection

(Jersey) Law 2005.

Sancus Finance Limited and Sancus BMS Group Limited are not regulated by the United Kingdom Financial Conduct Authority or by the Central Bank of Ireland.

Sancus (IOM) Limited holds a money lending licence issued by the Isle of Man Office of Fair Trading under the Moneylenders Act 1991, which regulates private lending in the Isle of

Man. Sancus (IOM) Limited is also registered with the Isle of Man Information Commissioner under the Isle of Man Data Protection Act 2002.

Sancus (Gibraltar) Limited holds a Moneylender's Licence issued by the Gibraltar Financial Services Commission under the Financial Services (Moneylending) Act 1917, which,

together with the Moneylending Rules 1917 regulates private lending in Gibraltar. Sancus (Gibraltar) Limited is also registered with the Gibraltar Data Protection Commissioner under

the Gibraltar Data Protection Act 2004.

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