I was going to say the p2p unwinding at Harmoney makes no difference to Heartland, It is only the retail part of p2p that is being unwound and the big boys like Heartland doing the wholesale funding just carry on. But on closer reading of the Harmoney Prospectus, I see that the wholesale peer to peer funding is being unwound as well! So I guess the answer is that all of that $199m in loans to Harmoney will be repaid. I imagine Heartland would have had the option of getting involved in one or more of these finance receivable warehousing operations that will ostensibly replace the peer to peer lending. However, to my knowledge they have so far declined to do so. From the Harmoney prospectus p74.
"In December 2018, Harmoney established its second funding channel – the New Zealand Warehouse Trust. <snip> The senior note funding is provided by a major bank (not Heartland then!), which initially subscribed to $35 million of senior notes. A large Australian asset manager subscribed to $9.75 million of the mezzanine notes."
"In September 2020, Harmoney also received credit committee approval from a global asset manager (not Heartland then!) for up to $200 million to establish a second Warehouse Facility in New Zealand."
I am slightly surprised at this because under the new warehouse funding model (Harmoney Prospectus p72), Heartland would transfer the "impairments for losses on loan receivables" to Harmoney and that would de-risk Heartland's own position in the loan operation. Given Heartland -apparently- do not want to continue operational involvement at Harmoney, I have to conclude that they have decided to make better use of their capital elsewhere. And that probably means they will sell down their equity position over the medium term within Harmoney as well, in my view. Personally I am not enamoured with the Harmoney target market for loans, particularly in post Covid-19 times. And I would be quite glad for Heartland to exit this kind of lending.
AFAIK Heartland have retained the arrangement whereby they granted $50m in wholesale funding to Harmoney when it was getting going. It will be up to Harmoney to see if they can get a better deal elsewhere with another bank.
SNOOPY