Estonian p2p lending marketplace Investly announced that Sonny Aswani became an investor. He will invest also directly in the loans offered via Investly. Continue reading
Countries
P2P Lending Marketplace is Raising 2M GBP via Seedrs
P2P Lending Marketplace AssetzCapital is raising 2 million GBP via a convertible note on Seedrs from the crowd.
Assetz Capital is one of the established, medium sized UK p2p lending marketplaces. Since inception they originated over 60 million GBP in loan volume. I covered Assetz Capital in when I visited them last year. How a convertible note pitch differs from a ‘normal’ equity pitch on Seedrs is described in this document.
Minimum investment is 10 GBP. The valuation cap for this convertible is 60 million GBP and the discount rate is 10% provided that the convertible shares are issued within 12 months. In the event that the convertible shares are issued after 12 months, the discount rate shall increase by a rate of 0.8% per calendar month for a further 11 months, increasing to 20% in the 24th month. The discount rate will then be capped at 20% thereafter. Continue reading
Report from the Symvest Conference in Prague
Last Thursday I attended the Symvest conference ‘P2P Lending – the New Frontier in Finance‘ in Prague, which was organised by Michael Sonenshine of Symfonie Capital in cooperation with the university of Economics, Prague. Speakers and panelists were mainly from Eastern Europe, though some made the trip from UK, Austria and Italy. The audience consisted predominantly of representatives of Czech finance (banks, investment companies) and students. A main motivation for the conference was to create awareness for p2p lending in general, which is a new phenomenon in the Czech Republic. Sonenshine announced his plans to launch SymCredit, a p2p lending marketplace catering to SMEs in Poland and the Czech Republic.
Matching the audiences experiences some of the content presented was introductory, like ‘What is p2p lending?‘, ‘What are the risks?‘ and a recap of what happened abroad in the past years of development in p2p lending. Regulation was also discussed. Sam Ridler of the P2PFA gave an overview on the UK situation and Danica Sebestová of Squire Patton Boggs did a very informative presentation on what the applicable legal environment is in the Czech Republic. Actually the hurdles for launching a p2p lending marketplace there are rather low – there is no specific regulation for p2p lending. While some applicable laws are to be obeyed, summed up it amounts to registering to start trading – at least as long as the loan volume originated is lower than 3 million Euro in the last 12 month.
Speakers pointed out that a hurdle to establish p2p lending is that Czechs are very conservative investors. Backing it up with figures, they explained that Czechs prefer to deposit their money in short term deposits at banks yielding only about 0.15% interest or invest into real estate rather than to look for higher yield investments.
The best part of attending conferences for me is the ability to network with so many people working in p2p lending in one place. I had lunch with Jevgenijs Kazanins, Chief Marketing Officer of Bondora. He wouldn’t disclose which markets Bondora will be entering next. Discussing investor wishes around the new portfolio manager, which does limit selection choices, he said that in Bondora’s view the new API will address this, as it will allow many parameters for selection. He would not disclose when the new API will be available.
I also had a long talk with Siim Maivel, CEO of Investly. He has interesting plans for new offerings. As soon as those are launched, I will write about them here in the blog. With David Bradley-Ward, CEO of Ablrate, I chatted about the scondary market and the loan pipeline. The secondary market will be completely overhauled and the new version launched in April. A small anecdote: He mentioned that it is not uncommon that 200,000 pounds would be spend on legal costs and due diligence of one of the aircraft loans on the platform. He therefore thinks it is porbably safe to call it the most extensive vetting of all p2p lending platforms.
With Martins Sulte I catched up on the last happenings around Mintos. He assured me that he does not expect the talks with the consumer protection body to have any impact on operations. I asked him for the reason for the high interest rates of the Mintos loans, after all these are secured loans. He explained that the Latvian banks are not interested in small loans (<50,000 Euro) backed by real estate, as for them the costs associated with the process are too high. Mintos is receiving many loan applications and so far approve only 3 to 5% of them. Sulte has expansion plans, both in product offering (moving into other secured loan types) and geographically (moving into more markets with Estonia being the next).
Concluding I would like to express my thanks to the organizers for this free to attend conference. It was well organized – they even had simulteneous interpreters translating every panel from Englisch into Czech language.
Latvia: Mintos in Disagreement with Consumer Right Protection Centre over Interpretation of Regulation
Recently launched p2p lending marketplace Mintos is in disagreement with a consumer right protection body of the government over the interpretation of rules regulating lending to consumers and whether Mintos is conducting business within these rules or not.
Two statements were published on the internet (here and here) last Friday that state, that while Mintos has the necessary license to lend to consumers, it failed to mention during the application that it would receive deposits from third party investors and make assignment of loan parts to these investors, for which in the view of the PTAC it lacks the necessary license. In the statement the body asks Mintos to cease continuing with this practise.
P2P-Banking.com contacted Mintos CEO MÄrtiņš Å ulte on Friday evening and received this comment by him: ‘To put it shortly Consumer Right Protection Centre (CRPC) has asked us to provide additional information on how peer-to-peer process works at Mintos. Before launching Mintos we did an in-depth legal due diligence and we are confident that we are working in accordance with all aplicable regulations.
The peer-to-peer (or better, marketplace) lending is still nascent industry and regulators in general around Europe are still debating on how to best respond to it. As forerunner of peer-to-peer lending in Latvia we have already had discussions with regulators and will continue to engage with them and help with information where necessary. We will hold an official press conference on Monday to encourage further discussion.‘ Continue reading
Non Standard Finance Intends To Raise 100M Pound to Acquire Alternative Finance Companies
Holding company Non-Standard Finance intends to raise around 100 million GBPÂ on the London stock market in order to acquire and operate alternative financial services companies focused on the UK’s non-standard customers.
The group, founded by former Provident Financial chairman John van Kuffeler, has already received a cornerstone investment of 48 million GBP from investors including Woodford Investment Management LLP,
Invesco Asset Management Limited and Marathon Asset Management.
NSF intends to enable its acquired companies or businesses to realise their growth potential through scaling of IT, capital, compliance and finance platforms. The Company has been set up as a vehicle to acquire at least one (and preferably two or three) target companies or businesses in the UK non-standard consumer finance sector. Once the Company has made and combined these acquisitions so that it is a substantial operating entity, its intention is to expand through further acquisitions in the sector in the UK and possibly elsewhere.
Out of over 100 non-standard lending businesses in the UK, the Directors have identified around 20 companies that could be of interest to the Company. The Directors are currently interested in pursuing acquisitions in the following sub-sectors: guaranteed loans, consumer loans, rent to own and home collected credit, all of which are in non-standard unsecured consumer finance. Continue reading
Experiences with Setting up a Company in Estonia for the Purpose of Investing in Bondora P2P Lending
This is an interview with Austrian investor Bernd R. about the experiences he made when he created a company in Estonia to benefit from the advantages that investing as business on Bondora brings. Note that these are his personal experiences and should not be construed to be investment or tax advice. The circumstances for other investors will be different and investors should seek tax advice by qualified and certified tax advisors.
How did you get the idea to setup a company in Estonia for your Bondora investments?
I read a lot about Estonia – its business friendly environment, simple tax system, huge start-up culture and the efforts to make administration processes available online.
Setting up an investment vehicle in Estonia would allow me to combine an uncomplicated taxation system with the advantages of a legal entity and all that at low costs.
What are the main advantages when investing as a company rather than an individual on Bondora?
There are several advantages.
- The corporate tax rate in Estonia is 0%. Only dividends are taxed with 20%. This means that your retained profits will generate additional profit. Double taxation agreements with your home country protect you from being taxed twice and usually limit the total taxation to the tax rate for dividends of your country of residence.
- In Austria interest income of private loans is treated in a different way than regular interest income (e.g. from a bank saving account). Interest income of classic bank saving product are taxed with a 25% flat rate, “private loans†fall under progressive taxation. On-top income of a full-time employee is easily taxed with 43% till 50%. So depending on the individual situation the tax savings can be up to 25%.
- Provisions for bad debts or write-offs reduce the taxation basis.
- Profits and Losses of different activities can be consolidated, e.g. losses generated with stock trading can be consolidated with your Bondora interest earnings and reduce the taxation basis.
How does the tax situation improve in your specific case?
I reduced the tax rate by 25% compared to my individual tax rate.
In addition I will generate more profit in absolute numbers due to untaxed retained earnings invested and at the same time reduce the taxation basis with bad debt provisions. The impact of these 2 factors depend on the future default- and interest rate of my Bondora portfolio.
To setup the Estonian OÜ you used a company formation service. Did that require you to travel to Estonia?
No, it was not necessary. A power of attorney does the job.
Continue reading