The Church of England’s £5.5 billion pension fund will review its full private equity portfolio following the revelation its investment with venture capital firm Accel Partners has given it an indirect investment in Wonga, a payday loan provider the church previously criticised for social reasons.
Apparently, the church was unaware it was an indirect investor before criticising Wonga’s business model. The Financial Times was first to report the conflict of interest, saying the church’s stakes in Accel-managed funds were “worth only a few million pounds”, citing someone with knowledge of the matter.
At least one secondaries investor was already planning an approach to the Church of England regarding its Accel stake, according to market sources. Accel was not available for comment by press time.
Last month the archbishop of Canterbury Justin Welby told Wonga the Church of England would promote credit unions as an alternative to payday lenders, which charge borrowers high interest rates for short-term loans.
Critics of payday loans say they target vulnerable borrowers who if unable to make repayment end up paying exorbitant fees and interest payments.
Wonga for example will demand a £183.49 repayment for a £150 loan due after 18 days, which with a £5.50 transmission fee, represents 5853 percent in annual interest charges.
In its 2011 annual report, the church said its “new policy on high interest rate lending extends the exclusion on investment in doorstep lending companies to cover companies engaged in payday loans and pawn broking”.
Via its London arm, Accel invested in Wonga in 2009 as part of a $22.5 million funding round alongside Greylock Partners and existing investor Balderton Capital. In March Accel held a first and final close on Accel London IV, a $475 million vehicle that will invest predominantly in Europe and Israel.