The Wellcome Trust has made an undisclosed investment in the Payday loans company Wonga following a recent round of fund raising to expand further into the UK, says loans company PayDayAdvances.net
Altrincham, Cheshire -- (SBWIRE) -- 01/21/2013 -- Wonga recently raised £73 million from investors, which included the Wellcome Trust and Meritech Capital partners, however the Trust’s latest investment has sparked concern from campaigners that are opposed to the payday loans industry.
In response to MP Stella Creasy’s recent public questioning about the wider social implications of investing in Wonga, Sir Mark Walport has gone on record to defend the Trust’s decision. In an open letter, Sir Walport claims that the company has a different business model to other Payday lenders and it would be misleading to compare them. “We have found the company to be extremely engaging and always willing to listen to feedback,” Sir Mark said.
The Wellcome Trust is the UK’s largest investment charity with a £13bn investment portfolio, however it has not been disclosed how much it has invested in Wonga, which intends to use the funding to expand its operations deep into the UK. Wonga has always been considered to be innovative in the way it uses technology in its business, and was the first to base the assessment of user applications on a real time platform instead of having each application laboriously checked by staff.
Errol Damelin, founder and chief executive officer of Wonga said: “Our customers are typically young professionals who generally have access to other forms of credit and like the short-term, transparent and flexible style of the service. We’re growing a new market and attracting people away from bank overdrafts and credit. Our investors understand our vision and can see we’re doing things in a very different way; disrupting a huge, traditional market with internet technology and data.”
Wonga has come under fire in recent years over its high interest rate of 2,689%, and Ms Creasy has been leading a campaign to get the interest rates capped. “I will be pushing for legislation introducing a range of caps on the cost of credit when I meet the Treasury minister Mark Hoban this week…” said Ms Creasy.
A spokesperson for loan broker, PaydayAdvances.net said: “The Wellcome Trust is one of the most successful charitable investors in the UK, and where they lead others will follow. Given their success with Payday loans in the UK and the predicted success of its innovative new service PayLater which was recently launched, it would seem like a shrewd move on the part of the Wellcome Trust to invest now.”
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