P2P platform nears completion of solvent wind down

Growth Street, which just four years ago revealed plans to inject £50m into Midlands businesses, has announced that it is nearing the completion of its solvent wind down and will shortly enter liquidation.

This follows the return of 100% of peer-to-peer (P2P) investor funds and a “highly successful” recovery process.

Growth Street was launched in 2015 with the mission to support the UK’s SMEs. At the time, it said its formation was in response to the difficulties being faced by SME businesses in obtaining finance. In 2018 it was granted full authorisation by the FCA.

By 2019, the business was funding over £500m of loans through its revolving credit product, GrowthLine.

In March 2020, when discussions around the potential long-term economic impact of the pandemic emerged, investors across P2P became increasingly concerned about their investments, and many sought to divest from the sector. As a result, Growth Street says it saw a significant increase in investors requesting to withdraw their funds from its platform. This increase in capital withdrawals led the platform to call a “Liquidity Event”. The continued impact of Covid-19 on the economic environment meant that Growth Street was unable to resume normal platform operations, and a “Resolution Event” was called in June last year.

In July 2020, despite efforts to secure alternative sources of liquidity in order to continue to offer the GrowthLine product to the market, the ongoing pandemic meant that this was not possible, and the business declared that on completion of the Resolution Event, it would begin a solvent wind down of business operations.

Kim Goetzke, COO of Growth Street said: “Entering liquidation marks the final chapter for Growth Street. Whilst this is certainly not the ending that was envisaged when the business was launched in 2015, nonetheless, the team and I are proud of its legacy, and how we have treated our investors and customers. I am confident that Growth Street in its lifetime made a significant contribution to the mission to address the funding gap for UK SMEs, and that like-minded organisations will continue to champion these vital businesses for years to come, providing them with the tools they need to grow. Whilst we encountered many hurdles, I firmly believe that the steps we had taken meant that the business was on the right track before the pandemic struck. However, we recognise that thousands of businesses have had their plans irrevocably altered by the pandemic.

“Once it became clear that wider market conditions meant that we would not be able to continue normal operations, ensuring that P2P investors were made whole, whilst continuing to support our borrowers in difficult circumstances, became our core focus. The businesses which Growth Street supported have fared well during the pandemic, and we have been able to recover funds in a manner that was supportive and sensitive to all of our stakeholders. Our business and the model which underpinned it was robust, however, like many others over the past twelve months, circumstances beyond our control meant that the business was forced into a solvent wind down. The board and I remain certain that this was the right decision.

“I want to thank all of the businesses we have worked with over the years and particularly those which have supported us in this recovery process. Finally, I am hugely grateful to the Growth Street team, past and present, for the incredibly hard work they put in through difficult times to deliver such a positive result for all of our parties.”