In January 2017, Factor@Work (an Italy based portfolio manager) has completed the purchase of 5 million EUR of corporate receivables through a securitization vehicle. All the assets have been originated by Workinvoice, an Italian invoice trading platform.
A first for Italy’s securitisation market, the deal was arranged by Workinvoice, while Zenith Service acted as SPV provider and master servicer. The receivables being securitised were sold by Italian small and medium sized enterprises (‘SMEs’) through Workinvoice’s invoice trading platform, and were originated by Workinvoice.
As part of this new securitisation model, Italian SMEs utilize the platform offered by Workinvoice to offer for sale some of their trade receivables held against their clients; the investor may then enter into a credit insurance agreement with an insurance company.
Workinvoice states that based on the receivables that have a low default risk and a high turnover, invoices securitization is a multistep process of providing a financing source by transforming illiquid assets into securities, resulting in the liquidation of the assets and the creation of new financing sources. Continue reading →
Funding Circle raised 100 million US$ of equity capital in a round led by Accel Partners. The round also included other existing investors Baillie Gifford, DST Global, Index Ventures, Ribbit Capital, Rocket Internet, Sands Capital Ventures, Temasek and Union Square Ventures.
The company will use the funding to continue to consolidate its position, as well as to continue to invest in technology and talent.
Measured by new origination volume during the last months Funding Circle is the largest p2p lending marketplace in the UK. The company is also present in the US and in continental Europe. Last week the British Business Bank committed to lend 40 million GBP to British SMEs through Funding Circle.
Funding Circle has now raised 373 million US$ in equity capital. The previous round was a 150M US$ in 2015 round led by DST Capital.
For decades buying houses, refurbishing them and selling them at a higher price and moving on to the next property seemed like a popular sport to Brits. Many of them see properties as investments and with house prices mostly moving up lots of them aimed to finance a property while they were young and then build a portfolio. With limited supply of new land with planning permissions this strategy worked well most of the times in the past, except when the market overheated and a real estate bubble popped.
There are downsides to this do-it-yourself approach:
Concentration of risk in one or few properties: if they underperperformed for what ever reason, the yield was sub-average
A lot of money, time and work required. The investor had to do everything itself as a landlord
Selection of new properties usually limited to a small region the investor lives in
British platform Property Partner allows everyone to invest in British properties from a minimum of 50 GBP. Investors select a listing, invest into a SPV (special purpose vehicle company) that pools the investment in the property. The SPV collects rental income and pays dividends to investors monthly. A useful table of the past achieved rental income can be seen here. In the green marked cases the actual rents are higher than the original forecsts. Potentially investors can also gain, if the value of the property rises.
The time span of an investment is 5 years, however investors can try to sell their parts on the secondary market, which allows discounts and premiums any time.
The platform allows the investor to diversify across multiple properties easily. The fee is 2% for investment (in new listings or buying through the secondary market). For management, advertising and letting Property Partner charges 12.6% of gross rent.
So far Property Partner has funded 311 properties for 43.9 million GBP with 9.100 investors participating.
For new listing there is a pre-order period, where bids are collected. If the listing is oversubscribed then each investor is allocated a lower proportionate amount of shares.
Each listing contains an investment case desctiption, property details, a floor plan, financials, a solicitor’s report and a surveyor’s report as well as the house price index (HPI) information for the area.
For the secondary market there is a ‘data view’ section which lists key indicators for the parts listed for sale.
Investors that do not want to pick listings can set up the auto-invest option which will automatically invest an amount the investor sets each month in 5 properties.
Investing from abroad
Property Partner allows foreigners (except for US residents) and corporations to invest. If you do not live in the UK but see the UK housing market as an investment opportunity Property Partner is a hassle free possibility to invest in british real estate. Non resident investors should consider using Transferwise or Currencyfair to avoid high bank fees and get a better currency exchange rate.
How to get 50 GBP cashback at sign-up
To get 50 GBP referral cashback, when you invest more than 1000 GBP sign up now via this link . To see available promotions by other platforms visit our cashback offer page.
Property Partner cashback confirmation at sign-up. To see it follow this link and sign up.
The following table lists the loan originations of p2p lending marketplaces in December. Funding Circle leads ahead of Ratesetter and Zopa. Lendix reports an all time record month. Saving Stream and Assetz Capital had a good month, too. Mintos crossed the milestone of 100 million EUR originated since inception. The total volume for the reported marketplaces adds up to 414 million Euro. I track the development of p2p lending volumes for many countries. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms.
Table: P2P Lending Volumes in December 2016. Source: own research Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
A few weeks ago I decided to start a small test portfolio investing in p2p loans at Zlty Melon. Zlty Melon is a p2p lending marketplace in Bratislava, Slovakia (see earlier articles about the Slovakian market). The marketplace lists loans to borrowers in Slovakia in Euro currency and to Czech borrowers in CZK. On the investor side Zlty Melon is open to residents of the European Economic Area. The website is available in English, Czech and Slovak languages.
I deposited 400 Euro via SEPA transfer. If you need currency conversion during a deposit, it might be cheaper to use Transferwise or Currencyfair than to do a direct bank transfer. Zlty Melon offers a range of loan types from unsecured consumer loans to ‘cashfree housing loans’ which the site describes as follows: ‘Loan to finance a new housing purchase. This loan is provided in cooperation with a well-known developer and is used to cover part of the purchase price of the property bought by the applicant. The real estate is being under construction.’.
I set up an autoinvest (called ‘Investment Manager’) to automatically bid 25 Euro on each new cashfree housing loans, as these seem the most secure loans and so far according to Zlty Melon’s statistics for this loan type there have not been any defaults. I set it up to invest in Slovak loans only as I didn’t want any currency risk. Maturity periods range from 1 to 5 years. For this loan type the interest rate is 5.9% p.a. and Zlty melon charges investors a fee of 0.33% on all installment payments. EDIT: Currently Zlty Melon runs a promotion for investors – if a large amount is invested in a single cashfree loan then investors can earn up to 1.1% bonus interest, making the total interest rate up to 7.0%. For unsecured consumer loans (which are graded AA to D- & HR) interest rates are much higher – up to 30-40% for HR loans – and the fee is 1%. Investors there engage in auction bidding against each other.
Screenshot: Excerpt of my Zltymelon dashboard
As I started only a few weeks ago, I don’t have that much experiences to share, only that the website is easy to use and offers a lot of information. With my selection criteria there is quite a bit of cash drag, as there are not that many new loans that match my filters. The total new loan volume (all loan types) that Zlty Melon originates each month is about 0.2 million EUR. Zlty Melon has a good comprehensive statistic page.
Zlty Melon does have a secondary market, but I have not used it.
While the interest rates on the loans I invest in are rather low, I like that the possibility to invest into Euro based p2p loans in a marketplace outside the Baltic area for diversification. I will see how my test portfolio develops and report on it periodically.Continue reading →
In August the FCA posted a call for input preceeding a planned review of the current regulation of p2p lending and crowdfunding for equity. Today the FCA publishes interim feedback. The feedback statement provides a first response to the feedback received and sets out next steps.
Based on a review of the feedback received, issues seen during the supervision of crowdfunding platforms currently trading and consideration of applications from firms seeking full authorisation, the FCA believes it is appropriate to modify a number of rules for the market.
Initial findings
Loan-based and investment-based crowdfunding
For both loan-based and investment-based crowdfunding platforms the FCA has found that, for example:
it is difficult for investors to compare platforms with each other or to compare crowdfunding with other asset classes due to complex and often unclear product offerings
it is difficult for investors to assess the risks and returns of investing on a platform
financial promotions do not always meet our requirement to be ‘clear, fair and not misleading’ and
the complex structures of some firms introduce operational risks and/or conflicts of interest that are not being managed sufficiently
Loan-based crowdfunding
In the loan-based crowdfunding market in particular the FCA is concerned that, for example:
certain features, such as some of the provision funds used by platforms, introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors
the plans some firms have for wind-down in the event of their failure are inadequate to successfully run-off loan books to maturity
the FCA has challenged some firms to improve their client money handling standards
Proposals for new rules to be considered in Q1 2017
The FCA plans to consult on additional rules in a number of areas. These include more prescriptive requirements on the content and timing of disclosures by both loan-based and investment-based crowdfunding platforms.
For loan-based crowdfunding the FCA also intends to consult on:
strengthening rules on wind-down plans
additional requirements or restrictions on cross-platform investment
extending mortgage-lending standards to loan-based platforms
The FCA’s current rules on loan-based and investment-based crowdfunding platforms came into force in April 2014. They aimed to create a proportionate regulatory framework that provided adequate investor protection whilst allowing for innovation and growth in the market.
The call for input in July 2016 launched a post-implementation review of these rules. The paper summarised market developments since 2014 and some of the FCA’s emerging concerns.
Andrew Bailey, Chief Executive of the FCA, said:
“Our focus is ensuring that investor protections are appropriate for the risks in the crowdfunding sector while continuing to promote effective competition in the interests of consumers. Based on our findings to date, we believe it is necessary to strengthen investor protection in a number of areas. We plan to consult next year on new rules to address the issues we have identified.†Continue reading →
