New product: Mintos Invest and Access – What it is and My Opinion

Mintos will launch a new product offer called Invest & Access tomorrow. It was already unveiled and presented at the P2P Conference in Riga on Friday. Before I write about it watch the video below for about 10 minutes with Mintos CEO Martins Sulte explaining Mintos Invest and Access.

invest and access presentation riga
the video should autostart at the right point. If not it is at 2:29:22

The new offer makes it super-easy for investors to invest and automatically diversify through a very wide selection of loans. Mintos does that by investing the money in all loans on the platform that carry a buyback guarantee and are from originators that are at least 6 months on the platform. Mintos promises that investors will be able to cash out easily (subject to market demand) instantly, saying investors don’t need to bother about handling the loan selling on the seondary market. Mintos does that by selling the non-late loans to other investors.

The investor can still see how the portfolio he holds is composed on an overview page. One important aspect for the market dynamics on Mintos marketplace is that Invest & Access will invest before the autoinvests.

Mintos is cleary aiming to make it easy for new investors that don’t want to spend much time thinking about the investment and optmizing yields by giving them the average yield by just one click. The Invest & Acesss page will show the weighted average interest rate, which at the time I saw that page was showed as 11.98%. But the figure will change and update as market conditions fluctate and as the FAQ says it is not guaranteed.

One important point in the FAQ/footnotes is that the ‘instant access’ only applies to current loans. That means if the investors has e.g. 15% late loans, that would mean that he gets only 85% as instant withdrawal and for the remaining 15% has to wait until either the loan is bought back by the buyback or becomes current again (I suppose in that case the investor could trigger another cashout).

Investors can runs both Mintos Invest & Access as well as the existing autoinvests, should they which, but in that case Invest & Access would use any available cash the investor has first, therefore I would guess that there are rarely any funds left for the autoinvests to use.

My Opinion on Mintos Invest and Access

Mintos clearly offers a product that makes it as easy as possible, lowering the entry hurdles especially for new investors. And as Bondora Go&Grow shows there is a high demand by investors for simplified products. Statistics published by Bondora show that in April 2019 63% of the new investments in that month where conducted via the Go&Grow product, which is constantly gaining over the other investment methods Bondora offers. Other examples are the Access products offered by British Assetz Capital.

Looking at it from the perspective of an investor that is a little more experienced and willing to spend a little time Invest & Access does not seem an attractive offer. By definition it offers the weighted average interest rate.

By setting up own autoinvests at Mintos, keeping a good diversification and foregoing the highest risk, investors can currently achieve about 13-14% yield on Mintos. So if they would instead use the new product they would have about 2-3% lower yield, and have actually less control on which originators they invest in. An important point to consider, is that the value Mintos shows you, is the average interest rate, NOT the expected average yield. The yield will be significantly lower than the interest rate as Mintos will include buyback loans from originators with long grace periods or originators that do not pay interest income on delayed payment. Excatly those are typically avoided when investors configure their own autoinvests.

And concerning the argument of liquidity. Mintos is very liquid anyway. Without using the new product it is no problem to liquidate a portfolio within a few minutes to  a few hours it just depends on the price. Sure you might have to offer a discount. Maybe depending 0.2%-0.6% on average. But that is a small price if you had the higher yields before.

So would I recommend using Invest & Access over the ‘traditional’ way of setting up own autoinvest? There is one use-case I would. If an investor wants to invest very short-time (for whatever reason ‘parking’ money) for less than say 120 days, than it is worth considering.

In my opinion on why Mintos launched the new product, there are actually two reasons:

  1. there is demand for a simplified product and this new product shall satisfy that
  2. the new product will help on the sales site for attracting and onboarding new orignators. Originators that can only offer rates that are below the average interest rate on the Mintos platform so far were hard to sell. With Invest & Access they will be just part of the bundle and automatically sold (once the originator has been on the platform 6 month)

That brings us to an interesting point. How will Mintos Invest & Access the market dynamics? The big factor here is that Mintos Invest & Access happens BEFORE autoinvest and manual investment. There are already (even before launch) speculations and fears of investors that it might bring down interest rates or ‘force’ them to use the new product to avoid cash drag, but I think it is much to early to make any prediction what might be the outcome. But I sure am curious what this will do to the activity on the Mintos marketplace.

What are your opinions on the new product? Please share them in the comments. Thx.

mintos invest and access

P.S.: The following interview with the Mintos CEO was recorded just before the announcement of the new product, therefore it does not cover Invest and Access – but it has a lot of information on the current state of Mintos.

(Source: Bernhard Hummel)

Estateguru Raises 1.3M EUR from Speedinvest

Baltic property p2p lending marketplace Estateguru announced, that it has raised a 1.3M EUR round led by Speedinvest f. Speedinvest f is a focus fund launched by Speedinvest, targeting Fintech investments across Europe. Speedinvest will support EstateGuru in its geographic expansion across Europe.

Marek Pärtel, founder and CEO of EstateGuru, outlines the company’s mission to become the largest pan-European real estate financing marketplace: ‘Today, EstateGuru has become the largest platform in mainland Europe, showing an average annual growth rate of 100%. Simultaneously, we have discovered excellent opportunities to further increase our market coverage and it is for this purpose that we have drafted a clear technological development plan that requires a strong partner in order to be implemented successfully.’

Christopher Zemina, Investment Manager at Speedinvest, explains the background of the investment: ‘EstateGuru is the story of a small team that has achieved extraordinary growth without much external funding. The team has executed their plans and constantly outperformed our expectations. We are determined to support the company in its next stage of growth.’

Estateguru Speedinvest
Estateguru founder and CEO Marek Pärtel

International P2P Lending Volumes May 2019

The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 607 million Euro. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Sourced.

Milestones achieved this month (total volume since launch):

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

p2p lending statistic may 2019
Table: P2P Lending Volumes in May 2019. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed: Continue reading

German Varengold Bank Acquires 20% Stake in Klear

Germany’s Varengold Bank AG has agreed to acquire 20 percent of Klear, a Bulgaria-based p2p lending platform in the emerging FinTech segment in Southeast Europe (SEE). The two sides have already signed an agreement under the terms of which the shares are expected to be transferred till the end of the second quarter of the year.  Varengold Bank AG is a German private bank, headquartered in Hamburg. Founded in 1995 as an asset management boutique seeking to offer individual and high-performing financial products for private and institutional clients. In 2013, Varengold was granted a commercial banking license when it transformed into to fully fledged commercial bank.

This is Varengold Bank’s first investment in a P2P lending platform, based in the SEE region. The German bank opened a branch in Sofia in November 2018 with the mission to turn it into a major hub for its expansion in Southeast Europe.

Varengold Bank will support the development and growth of Klear with a BGN 1.5 million financial package, which comprises of equity and debt funding. The proceeds from the package will be used to expand Klear’s operations across Bulgaria and SEE.

Varengold previously already dealt with p2p lending marketplaces, e.g. extending a credit line to Estonian marketplace Estateguru.

Klear provides individuals with the opportunity to lend loans and generate a return on investment and others to borrow quickly and easily at reasonable interest rates. So far, 1175 active investors have provided 938 loans through the lending platform at the amount of more than BGN 8 million.

Klear was founded by Loic Le Pichoux, Lukasz Lukaszewski and Nikolay Stanev, entrepreneurs with solid experience in consumer finance, with the idea to be fairer and more transparent in terms of interest rates and return on investment. It has been named The Best FinTech Startup in Bulgaria at the Central European Startup Awards two times in a row – in 2017 and 2018. An interview with the founder from Januar 2017.

“When we enter in partnerships, we seek proven marketplace business concepts with growth potential along with unwavering commitment from the company’s principal owners towards the mission of their organization. We look for strong teams and leaders that are ready to take and share risks in a responsible manner and want to scale up their operations globally. The business case of Klear fully fits these requirements. Supporting the development and growth of P2P lending platforms and FinTech players like Klear is one of Varengold’s key priorities in Bulgaria and SEE. These marketplace platforms are growing and expanding their operations. They are reshaping the conventional approach in the financial industry and will step-by-step replace traditional ways in lending, simply by providing significantly more favourable terms and conditions to borrowers, improving access to funds for consumers and also making raising funds more affordable. This is a fundamental change on the market and we are satisfied to take part in it actively, said Sergey Panteleev, General Manager of Varengold Bank`s Sofia Branch.

UK P2P Lending Marketplace Lendy in Administration

P2P Lending marketplace Lendy is in administration according to a statement by the British regulator FCA: “On 24 May 2019, following action taken by the FCA, Lendy Ltd, a regulated Peer-to Peer (P2P) firm, appointed Damian Webb, Phillip Rodney Sykes and Mark John Wilson of RSM Restructuring Advisory LLP as administrators. The same administrators have been appointed for two further related, but unregulated, firms: Lendy Provision Reserve Ltd; and Saving Stream Security Holding Limited. These appointments have been made by the firms, in respect of Lendy Ltd, with the consent of the FCA.”

There is an ongoing FCA investigation into the circumstances that have led to this action.

Lendy was in growing troubles over the past weeks. Lendy was put on a FCA watchlist in January. In April the FCA restricted the actions the company could take ‘[the firm must not] in any way dispose of, deal with or diminish the value of any of its assets and must not in any way release client money without in either case the prior written consent of the authority’.
The interest payments for April, due on May 1st, were delayed for 2 weeks, which Lendy blamed on technical problems with the banking partner. Early today trading on the secondary market was suspended, when the ability to trade was removed. However the trading had nearly stopped anyway as there was little buyer demand.

Lendy finally succumbed the unsustainable level of defaults of the development loans and the unsatisfactory level of recoveries from these. Members of the management were furthermore already engaged in roles in other companies.

There is an outstanding loan portfolio of about 155 million GBP, of which about 90 million GBP are in default.

These events come a year after another property lending marketplace, Collateral entered administration.

Other European p2p lending companies that failed include Boober, Comunitae and Trustbuddy.

Review: My P2P Lending Portfolio May 2019

I covered my p2p lending portfolio periodically over the past 12 years in this blog. The following report is a snapshot on how it is composed right now (May 2019) and which strategy I will take for the next months. As you can see below I aim for a widespread diversification (over different platforms as well as geographically) of my p2p lending investments.

Mintos

Mintos is my biggest position. I run a trading strategy on Mintos. Mintos gives my net annual return as 15.1%. Calculating it myself based on the deposits and withdrawals I get a XIRR value of 24.8%. The cause for the huge discrepancy is that Mintos does not account correctly for the cashback of the campaigns. I heavily traded, when Mogo ran a campaign. For example I invested in new Mogo loans that were offered with a 2% cashback on the primary market, nearly instantly sold them with 1.8% discount on the secondary market and pocketed the cashback. Rinse and repeat.

Mintos net annual return

I am satisfied with the current degree of diversification over loan originators in my Mintos portfolio. The bulk of my investments is in loan terms between 3 and 30 months at interest rates ranging from 13% to 15%. The lower interest rate loans are usually only held temporary as part of my trading strategy.

mintos portfolio originators

For the coming month I plan to keep my Mintos investment at roughly that amount, reinvesting the paid principal and interest.
New investors registering via this link at Mintos, get 1% cashback on amounts invested in the first 90 days. Mintos is currently not accepting UK investors.

Linked Finance

My second largest p2p investment is on Irish SME loan platform Linked Finance.

linked finance portfolio

Diversification achieved is good. The majority of my loans have interest rates between 8% and 11%. Most loan terms are 2 or 3 years.

linked finance portfolio diversification

I “collected” 7 loans in default (double dip on the golf loan). But 5 of these had repaid more than half the principal before they want into the default state so the principal in default sums up to only 270 Euro. My self-calulated XIRR value is 6.4% if I totally write off the amounts in default and 7.1% if I assume that half the amount in default will be recovered. I plan to slightly increase my Linked Finance portfolio in the next months. Linked Finance is not offering any cashback or bonus rewards for new investors.

Bondora

Bondora is my third largest and oldest (still running) p2p lending portfolio. I started in 2012. My self calculated XIRR value is 16.6%. A yield that high is not achievable nowadays anymore. My portfolio profited heavily from the first years when interest rates were typically 28% to 34%.

bondora portfolio profitability

I am currently investing into Estonian A and B loans using these autoinvest settings. I have used these settings unchanged for 11 months now and it is running totally hands-off with no maintenance required.

bondora portfolio pro autoinvest

On Bondora I reinvest the bulk of my repayments and occasionaly withdraw some funds. New investors registering on Bondora using this link get a 5 Euro sign-up bonus.

Ratesetter Australia

Ratesetter Australia is my fourth largest p2p investment and also one of my youngest. I started in August 2018. My XIRR value self calculated in AUD is 9,1% if I include the 75 AUD sign-up bonus and 7.4% if I do not include that.

ratesetter australia account

My money is mostly invested on the Ratesetter 5 year market at an average rate of 9.2% (that is after fees but before withholding tax).

ratesetter australia loans

In the past months the interest rates have dropped considerably therefore I am parking some funds on the 1 month market or invest them on the 3 year market.

ratesetter australia rates

I am reinvesting all repayments at Ratesetter Australia. If rates go up again I plan to do that on the 5 year market, otherwise I’ll settle for the 3 year market. It is a little complicated to register as a non-resident, but I have described how I managed to sign up as a European here. New investors can earn a 75 AUD promotion bonus by investing 2,000 AUD or more in our 3 year Income or 5 year Income lending markets before 31st May 2019. Achieving that requirement in time will not be easy, even if you start directly.

Iuvo Group

The fifth largest position of my p2p portfolio is invested at Iuvo. It is running hands-off and does not require any maintenance.

iuvo group portfolio

I continue to reinvest all repayments. Iuvo pays new investors a very generous cashback of up to 90 EUR. For more details and how to get it see the cashback overview page.

Estateguru

estateguru portfolioAfter I completely exited Lendy in last autumn, baltic Estateguru is now my largest platform for property secured loans. I don’t use the autoinvest. Instead I periodically login and manually invest into a new Estonian loan secured by a first rank mortgage.

I mostly reinvest all repayments. New investors get 0.5% cashback for all investments in the first 90 days, if they sign up using this link.

Fellow Finance

I used to have a larger portfolio at finnish Fellow Finance but I did not want to go below 12% for 4 star Finnish consumer loans therefore I started withdrawing funds last year. In January the sale price collections paid tor Finnish loans dropped from 70% to 53% which reinforced my decision to exit.

fellow finance portfolio

October

I am running down my portfolio on French SME loan marketplace October. With the low interest rates and rising defaults (6 out of 52 loans) in my portfolio the risk reward ratio is not for my taste anymore.

october loan portfolio

New investors signing up on October using this link can get 20 EUR bonus (200 Euro minimum investment)

More p2p lending marketplaces

Due to professional interest (want to gain first hand experience) and curiosity I have more p2p lending portfolios at Ablrate (small, reinvesting), Assetz Capital (tiny, reinvesting, possibly increasing), Bulkestate (tiny, testing), Crowdestate (small, reinvesting), Finbee (tiny, nearly exited), Investly (small, reinvesting), Lenndy (tiny, watching), Monestro, (tiny, exiting), Moneything (small, exiting), Neofinance (small, testing, probably running down), Reinvest24 (small, testing), Robocash (small, reinvesting), Zlty Melon (tiny, exiting next month when terms are up).

Crowdinvesting

Not p2p lending but investing in startups. I am a huge fan of Seedrs. Investing in startups is of course even higher risk than investing in p2p lending. Nevertheless I went ahead and built a big Seedrs portfolio over the last years. Snapshot:

seedrs portfolio

P2P Conference Riga

I am looking forward to be at the P2P Conference in Riga which is less than 4 weeks away. The conference is reasonably priced (enter promotional code P2PEARLYBIRD40 for 40% rebate) and Riga can be reached with cheap flights from many European cities. BTW, Riga is an interesting town, if you have not been there yet you could combine the conference with some sightseeing.