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Taaleritehdas becomes an owner of the P2P lending company Fellow Finance

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Taaleritehdas invested 2 million EUR in the peer-to-peer (P2P) lending company Fellow Finance Oy and, at the same time, sold the entire stock of its Financing Company Lainaamo Ltd to Fellow Finance Oy as a share exchange. Lainaamo has a consumer credit portfolio of approximately 20 million EUR  with thousands of consumer customers. After the acquisition, Taaleritehdas owns 38.4% of Fellow Finance Oy. In addition, Taaleritehdas has an option to increase its holding in the company by 7.3%.
Fellow Finance’s founders, Jouni Hintikka and Teemu Nyholm, each own 18.4% of the company. In total, Fellow Finance key persons have a 57.3% holding in the company.

According to its vision, Taaleritehdas aims to develop the Finnish capital market. Taaleritehdas believes that increased direct financing will be one of the most significant changes in the finance industry in the future. The focus in financing will increasingly shift from the bank-centric approach towards direct financing. Another strong megatrend in the financing sector, as seen by Taaleritehdas, is digitalisation. Both Fellow Finance and Lainaamo offer their services completely online. Ownership of Fellow Finance enables Taaleritehdas to offer its customers a new investment form and to utilise digitalisation in its own activities, as well. The merger of Lainaamo and Fellow Finance will not affect the position of borrower
customers or investors. Continue reading →

Bitbond Raises 600K Euro

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Bitbond LogoBitcoin lending platform Bitbond today announced an angel funding round of 600,000 EUR. The round brings Bitbond’s raised capital to a total of 800,000 EUR.

Led by Bitbond’s earlier seed investor Point Nine Capital, a number of business angels contributed  to the round. Among them were Florian Heinemann, Uwe Horstmann, Christian Vollmann and Felix Jahn. Bitbond will use the additional funds to grow its user base and to increase its activity in emerging markets which are underserved by traditional lenders. The platform went live in July 2013. Since then over 600 loans were originated through the platform.

Founder & CEO of Bitbond Radoslav Albrecht said: “The additional resources will help us to continue realizing our mission which is to make lending and borrowing globally accessible. We are happy to have such experienced investors supporting us on this exciting journey.”

According to the IFC (International Finance Corporation of the World Bank) the global credit gap of microenterprises and small and medium sized businesses is around USD 2 trillion. Bitbond seeks to help solve this problem by creating a global market for small business loans that is accessible to everyone via the internet.

Since its first external funding in August 2014 Bitbond introduced a number of technological advancements. These include exchange rate pegged loans which allow borrowers and lenders to mitigate bitcoin price fluctuations.

CEO Radoslav Albrecht wrote the guest post ‘Bitcoin P2P Lending – a Primer in 8 Steps‘ in Dec. 2014 for P2P-Banking.com.

Editor’s comment: My personal opinion is that cross-border lending based on bitcoin is currently a high risk proposition to investors. While I appreciate some of the technological advantages the platform pursues, I think further development is needed, especially in debt collection processes.

Mintos Starts P2P Lending in Lithuania

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MintosLatvia p2p lending marketplace Mintos announced today that it expands and now offers p2p loans – secured by cars as collateral to borrowers in Lithuania. This is the third country Mintos operates in after Latvia and Estonia. Mintos is open to international investors from Europe – the website states 1,200 registered investors from 26 countries.

The car loans in Lithuania are originated in cooperation with Mogo – a partner Mintos is already using in Estonia, where they together funded 250 car loans for a total of 300K EUR.

When investing in secured car loans investors enter in a direct contract with a borrower – similar to real estate backed loans the contract with respective borrower is transferred from Mogo to investor based on assignment. According to assignment agreement, part of the interest that borrowers pay is not assigned to investors and remains with Mogo to compensate it for loan origination and servicing. Continue reading →

P2P Lending in India: A Concept Ahead of its Time

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This is a guest post by an author working in the financial sector in India.

Consumer Peer to Peer or P2P lending (where consumers lend and borrow from each other with the help of an intermediary) has become an important part of the financial services sector in many countries globally. Companies like Lending Club and Prosper in the US, that only started a few years ago are now worth billions of dollars. Many success stories in the west have been replicated in India, making it a belief amongst many that P2P Lending is no different. However, as proven multiple times before, a credit business isn’t the easiest to clone and depends on multiple factors including the regulatory environment, end-user mindset towards credit and intermediaries such as credit bureaus, verification, collection and recovery agencies.

  1. P2P Lending is not regulated in India

indiaThe Indian Banking Regulator, The Reserve Bank of India (RBI) has not regulated peer to peer lending in India. This essentially means that privileges enjoyed by similar platforms globally, namely, access and reporting back to credit bureaus (like CIBIL in India); are not available to a P2P platform in India. These have important repercussions on the performance of loans originated through these platforms and can lead to suboptimal results. For e.g. if lenders are not able to see credit reports, then they will be in an inferior position compared to banks and other financial institutions to make credit assessments. Similarly, without the loan performance being reported back to the bureau, some borrowers may not feel the pressure to re-pay their lenders. Lastly, borrowers looking to build and improve their credit rating do not benefit, as their loan performance is not reported to the credit bureaus (CIBIL).

  1. Little spread between risk-free rates and borrowing rates from banks and other regulated financial institutions (NBFC’s) provides no real benefit to borrowers

A huge difference between the west and India is the difference between the risk-free rate and the borrowing rate. In the US and UK the difference between the two is as much as 12-15 percentage points. In India, the risk free rate is at over 8% and banks lend money starting at 12%. With lenders looking to make returns between 15-16%, the rate for the borrowers gets as high as 20%+ when the platform fee is also taken into account. This makes it unsuitable for lower risk borrowers who can find cheaper loans from banks and non-banking financial companies (NBFC’s). Continue reading →

Interview with Peter Schierenbeck, CMO & co-founder of Lendify

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What is Lendify about?

Lendify is the first and leading peer-to-peer lending platform focused on prime borrowers in the unsecured consumer credit space in Sweden. We have handled loan applications for over SEK 350 MM and more than 3,000 lenders and borrowers have signed up since launch in August 2014.

What are the three main advantages for investors?

  • High risk-adjusted returns.
  • Access to unsecured personal loans extended to prime borrowers in a very low-default rate market (Sweden) with many years of well documented historical data.
  • A new type of investments that further diversifies a mixed investment portfolio.

What are the three main advantages for borrowers?

  • Personalized interest rate.
  • Transparent (all interests and fees are clearly presented and available to all site visitors)
  • Simple and fast process for applying and monitoring (borrowers can log in and see status of payments etc.)

Peter Schierenbeck, LendifyWhat ROI can investors expect?

It is still early days for P2P lending in Sweden but we expect 7% on average.

Lendify received 2M EUR in funding recently. Who are the backers?

Fredrik Wallenberg, Hans Westin & Sten Schröder where the two latter have a great track record in the Swedish consumer lending space.

Is the technical platform self-developed?

Yes, everything is developed in-house.

What was the greatest challenge so far in the course launching Lendify?

Being the first in a market is great, but it also provides challenges out of a marketing and regulatory perspective. Not many people in Sweden are aware of the concept “peer-to-peer lending”, and we work hard to educate people of the concept. Continue reading →

One Year Invested in Zencap

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This is a guest post by German investor Martin R.. The article was written in April.

These days, Zencap celebrates its first anniversary. I’ve been involved right from the beginning and invested the full 10k€ you can invest without having a premium account.

Zencap – my characteristics

Zencap offers investment in corporate loans. You invest 100 EUR in one loan. The total loan is usually between some 10,000 EUR and approximately 200,000€. There are different scoring classes essentially determining the interest rates which are usually located between 5% and a little over 10%. The loan term ranges from 3 months up to 5 years, the main focus being 3 years. As the loans are instalment loans, you will usually have half of your investment plus interests available after 18 months. The nominal interest rates are decreased by 1% through fees for the investor. The loan listings are presented with a short description and have differently detailed documents attached. Some projects have personal sureties.

My experiences

are mixed. I’m rather satisfied with a yield of about 5.7% and no payment delays up to now. The payout takes place promptly after the scheduled payment at the 15th of each month. The bidding amounts are straightforwardly drawn through direct debit, however, the period between bidding and drawdown drag on very long from time to time (debiting is just before the first paying out, though). Now and then there are special promotions which increase the yield (see below). Continue reading →