The German market is a tough market for p2p lending services to succeed. Few companies run a p2p lending marketplace model. One of the earliest players, Smava pivoted already in 2012 and now brokers bank loans.
After months and years of announcements and waiting Funding Circle Germany yesterday published loan book performance figures. Data reported is on all loans since launch on March 30th, 2014 (at that time Zencap) and as of June 30th, 2017. In total there were 920 loans.
Figures:
Total loan origination volume 66,560,800 EURÂ 100% Repaid loan volume 26,859,284 EUR 40.35% Loan volume in default (more than 90 days overdue): 3,988,632 EUR 5.99% Outstanding principal: 35,712,885 EUR 53.65% Total interest paid to investors: 4,578,552 EUR
The outstanding principal of 35,712,885 EUR (100%) is further categorized: Current: 33,293,583 EUR 93.23% Loans that are less than 30 days overdue: 1,664,005 EUR 4,66% Loans that are 30 to 60 days overdue: 421,902 EUR 1.18% Loans that are 60 to 90 days overdue: 333,394 EUR 0.93%
Average weighted interest rate: 8.41%
I would have linked to the source here, but Funding Circle pulled the figures within hours after publication and the page now returns a 404 error (I did save a screen shot before they were pulled). I reached out via email to Funding Circle asking for the reasons, but have not received a reply up to the point of publication of this article. Update: I received a reply from Funding Circle stating that the figures were not correct and did not match Funding Circle’s global reporting format. An example given was that payments made by defaulted loans were omitted. Funding Circle strives to publish the corrected figures asap. 2nd update July 13th: Funding Circle has now published updated figures in changes format. They are online here.
Phrasing it differently one could say that 9.6% (6,4M/66,6) of all issued loans are currently overdue or in default.
In my view the figures give a very bleak – but correct picture of the state of Funding Circle Germany’s loan book. Overdue and default figures are high. With nearly 6% of the loan amount in default and more than another 6% of the remaining loans overdue, there is a very high probability that many investors will incur (after tax) losses. Usually German investors cannot offset default losses against interest earned.
My portfolio
I invested into 27 loans with 100 EUR each (the minimum bid). I stopped investing already in February 2015, after only 10 month, when it became clear to me that Funding Circle Germany had higher overdue figures than expected. However as there is no secondary market at Funding Circle Germany I was stuck with the loans until maturity.
Of my 27 loans the status today is: – 22 repaid – 4 overdue (2 of them for 256 days !) – 1 default (in collection)
I already received back 2,303 EUR of the principal, so there is only about 15% of my investment amount still outstanding. I might get away with a return around zero, as my defaults + overdues are still lower than the interest paid, but it will be close as I have to pay taxes on the full interest earned regardless of defaults. My dashboard still claims 4.12% yield for my portfolio, which does not reflect reality as I see it. The only chance for that to happen would be full recovery of defaults and overdues, which is an unlikely scenario.
My own portfolio at Funding Circle Germany
Investor sentiment towards Funding Circle Germany seems to have turned mostly negative to sarcastic in the past two years if you look at the massive critic on the Funding Circle forum at P2P-Kredite.com. Funding Circle Germany no longer publishes statistics regularly on new monthly loan volumes.
The table lists the loan originations of p2p lending marketplaces in June. Funding Circle leads ahead of Zopa and Lendinvest. Assetz Capital makes a huge leap forward. The total volume for the reported platforms adds up to 530 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.
Milestones reached this month are:
Twino reaches 150 million EUR in origination since launch
Table: P2P Lending Volumes in June 2017. Source: own research
Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
Plum is another fintech that makes use of Ratesetter’s products through a cooperation. Plum is bot on Facebook messenger designed to automate savings for the user and to invest money on his behalf. Savings can currently be invested in Ratesetters rolling market. Plum is currently pitching to raise 700K GBP through a convertible with a valuation cap of 5M GBP on Seedrs. Watch the video for more information on the Plum product and pitch. The minimum investment for this equity crowdfunding campaign is 10 GBP. The pitch is EIS eligible (UK residents). Other investors include 200K US$ invested by VC 500 Startups. This pitch is not yet officially launched on Seedrs, but already open for investments. You can use P2P-Banking’s free notification service to be alerted of upcoming Seedrs pitches early and review them ahead of the crowd.
Competitors of Plum include Digit, Qapital, Clarity, Albert, Squirrel, Cleo and Savedroid.
The Plum pitch deck is informative reading. To request that, login, click on ‘Documents’ in the pitch, and send a message to request the pitch deck.
Another example of an innovative cooperative cooperation making use of products of a p2p lending service is Commuterclub.
This article is not an investment advice. Investing in startups bears significant risks, including total loss of investment.
Since its creation, Credit.fr has financed 217 companies, raising a total of over EUR 13 million, through 13,000 loans from retail clients willing to support the real economy while securing an attractive return. Credit.fr has also established numerous partnerships with financial sector players, including HelloBank!, the first French bank recommending its clients to invest on a p2p lending platform nearly a year ago.
Guillaume Arnaud, Managing Director of Tikehau IM, said: “We have been monitoring SME crowdlending platforms in Europe for some time now, particularly in France, where the market has strong growth potential. The acquisition of Credit.fr provides us a unique smaller business lending knowhow and allows us to expand our range of financing solutions and therefore address most of French companies.â€
Thomas de Bourayne, CEO of Credit.fr added: “With its renowned asset management expertise and strong growth, Tikehau Capital represents the ideal partner for Credit.fr to develop in France and internationally. This deal will enable us to offer institutional investors solutions for investing in a new asset class and support the development of small French businesses.†Continue reading →
German media holding ProSiebenSat.1 has sold its stake in German p2p lending marketplace Auxmoney to new investment fund Crosslantic Capital, in which Lexington Partners is the majority shareholder. This is part of a package sale of shares in 16 startups. ProSieben investment company Seven Ventures will hold a minority stake of 24.5% in the new fund.
