Wellcome Trust invests in online lender Wonga 3

Finance | Vibeka Mair | 21 Feb 2011

The Wellcome Trust has added Wonga, the online short-term loan firm, to its £13bn investment portfolio.

The Trust, which is the UK’s largest investment charity, has invested an undisclosed amount in Wonga’s £73m round of funding led by Oak Investment Partners. Wonga plans to use the cash to expand further in the UK, its home market.

Wonga has attracted criticism for offering short-term loans at an annual interest rate of 2,689 per cent and Mayor of London Boris Johnson came under fire last year for selling prime advertising space on London buses and tubes to Wonga in return for it sponsoring free travel on new year's eve.

However, Wonga argues that its services are meant for short-term loans of up to £1,000 which must be repaid within a month and that its annual interest rate is clearly displayed on its website.

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.”

Last year, the Wellcome Trust recorded an 11.1 per cent return on its investments in the year to September 2010.

Public equities, the largest element of the portfolio, returned 31 per cent, which is 12 per cent ahead of global equities markets over the period.

Directory: Wellcome Trust

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Dan Filson
1 Jul 2011

Wonga.com advertises on TV loans at 4,214% APR which is usury by any definition. Wellcome Trust should be ashamed to invest in such an enterprise. Bad money drives out good and this firm will, with this extra capital, find it easier to beat off competition offering loans at lower rates.

[Reply]

John McCrank
22 Feb 2011

I agree with Bob wonga and similar companies offer loans on short term and large interest rates that are taken up by people who are desperate for money a large percentage of whom are likely to be on benefits or low income many of whom are the targetted beneficiaries of the groups funded by the trust. These beneficiaries will now be involve indirectly in supplying the money to get themselves out of the poor circumstances they are in how can Welcome believe this to be ethical

[Reply]

Bob Marchant
21 Feb 2011

The Welcome Trust do some valuable work but on this occasion they should be ashamed of themselves.

[Reply]

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