Sancus BMS Group Sancus (Isle of Man) Mike Hennessy & Andrew - PowerPoint PPT Presentation

Sancus BMS Group Sancus (Isle of Man) Mike Hennessy & Andrew Whelan 18 th July 2017

Your hosts Andrew Whelan – CEO, Sancus BMS Group Chartered 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. This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 2 | 11/07/2017

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) This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 3 | 11/07/2017

Corporate Structure A profitable niche lending business operating different funding solutions in multiple jurisdictions. Sancus BMS Group Ireland UK Jersey Guernsey Gibraltar Isle of Man* BMS Finance (Ireland) Sancus Finance Ltd Sancus (Jersey) Ltd Sancus (Guernsey) Ltd Sancus (Gibraltar) Ltd Sancus (IOM) Ltd SARL Company No. 7485900 Company No. 58612 Company No. 112755 Company No. 012528V Company No. 113391 Company No. 905187 BMS Finance (UK) SARL Company No. 06008835 Total staff 39** *Affiliate ** As at 31/12/16 This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 4 | 11/07/2017

Sancus Group Overview £162m £578m £274m Invoice Discounting Cumulative Loan Book Supply Chain Financing Asset Backed Loans £142m £30m £3m* Business Loans Proprietary Capital 2016 Profits British Business Bank Ireland Strategic Investment Fund Investments Ltd is an investor in is an investor in £152m BMS Finance (Ireland) SARL BMS Finance (UK) SARL Live Loan Book *Excluding Sancus Finance (estimate) Data source: Sancus Group as at 31/12/16 This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 5 | 11/07/2017

Our Funding Solutions Short Term/Ongoing Medium Term Long term (3 – 24 months) (24 – 60 months) (1 to 3 months)    Invoice Discounting Asset Backed Loans Intellectual Property    Supply Chain Finance Property Bridge Mergers & Acquisitions   Property Development Cash Flow  Mezzanine This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 6 | 11/07/2017

Traditional Banking versus P2P Traditional Banks Borrower Sancus BMS Group Borrower  Government Endorsed • Cost Inefficiencies Lower Rates Margin Margin  Attractive Rates • & High Margins & Costs Costs Costs  Convenient • Costs Better Returns and Restrictive Lending Margins and Margins Lender Depositor Lenders and Borrowers share the margin that banks traditionally captured This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 7 | 11/07/2017

Total Quarterly P2P Cumulative Lending (UK estimate) Total amount lent to individuals/firms at the end of each period 10 9.18 9 8.13 8 7.25 6.42 7 5.5 6 £ billion 4.67 Total Cumulative Lending 5 3.91 Cumulative Business Lending 4 3.28 2.7 Cumulative Consumer Lending 3 2.27 2 1 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 Source : University of Cambridge Judge Business School This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 8 | 11/07/2017

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. This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 9 | 11/07/2017

The Benefits for Borrowers 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. This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 10 | 11/07/2017

The Benefits for Co-Funders 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. This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 11 | 11/07/2017

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. This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 12 | 11/07/2017

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). This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 13 | 11/07/2017

What about Brexit? Political and economic uncertainty What could happen What we have seen so far  Slow growth in UK;  £ weakened against $ and €;  Some real estate has declined in value;  Imported goods more expensive;  UK may create its own path in regulation of  UK downgraded by several credit agencies;  Disruption in the ability of UK banks to access funding. 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. This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 14 | 11/07/2017

Conclusion  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. This document is confidential and should only be circulated with prior approval from Sancus BMS Group. 15 | 11/07/2017