Crowdbond platforms set for bigger projects amid fundraising rule change

Author:  Marc Shoffman, July 3, 2018 P2P Finance News

CROWDBOND platforms may offer bigger projects from later this month after the government approved legislation to increase the threshold for exemption from the Prospectus Directive from €5m (£4.4m) to €8m (£7.07m).

Current EU prospectus rules – which are a part of the Markets in Financial Instruments Directive – stipulate that companies need to issue a prospectus for debt- or equity-based crowdfunding worth more than €5m and get it signed off by the Financial Conduct Authority (FCA, a process that could take six weeks.

The crowdfunding industry had been campaigning to raise this threshold, as it argued that the cap was too low and made compliance costs proportionally too high on smaller fundraisings.

But now, anyone raising up to €8m will just need to produce an offer document that can be approved by a regulated firm.

Bruce Davis, co-founder of renewables and housing peer-to-peer platform Abundance, said this reduced the amount of bureaucracy and opened a new market of firms.

“Previously it could take six weeks for a platform to do due diligence and then you may need another six weeks from the FCA, this removes that layer for essentially around £7m where there was a gap,” Davis (pictured) told Peer2Peer Finance News.

“It brings in a different type of deal.

“We can look at firms that are more mature such as larger businesses, infracutre projexts or bigger solar farms or wind parks.

“We have been waiting for this to come through. Every platform has stuff waiting in the wings on this.”

The changes come into effect on 21 July.