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):
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.
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.
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.
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* 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.
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.
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.
My second largest p2p investment is on Irish SME loan platform Linked Finance.
Diversification achieved is good. The majority of my loans have interest rates between 8% and 11%. Most loan terms are 2 or 3 years.
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 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%.
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.
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* 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.
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).
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.
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.
The fifth largest position of my p2p portfolio is invested at Iuvo. It is running hands-off and does not require any maintenance.
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.
After 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.
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.
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.
New investors signing up on October using this link* can get 20 EUR bonus (200 Euro minimum investment)
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:
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.
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 571 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 achieved this month (total volume since launch):
I interviewed Jana Mücková, Relationship Manager at Bondster* (see her bio at the end of the article). By registering via this link and entering promotion code 5506 new investors get 1% cashback on all investments in the first three month.
What is Bondster about?
Bondster is one of the fastest growing fintech companies in the field of P2P (Peer-to-Peer) loan marketplaces in Europe and the very first online investment platform of its kind in the Czech Republic. Bondster connects providers of loans with retail investors. Investors (individual or companies) may invest their free funds into loans already provided by different providers. Investors can choose from different types of loans, maturity, security, providers. Investors can also see the repayment history of the debtor to whom the loan had been provided and they can also see the basic information about the debtor.
What are the three main advantages for investors?
The biggest advantage is definitely high returns on loans. Moreover, these loans are either secured (by real estate or movables) or offered with a Buyback Guarantee (in case the debtor does not repay the loan, the provider has to buy it back from the investor) which eliminates the risk for investors. Imagine your money sits in the bank account, you lose money in real terms every single day since the inflation rate is higher than the nominal interest rate on your bank deposits. On Bondster investors can earn more than 11 % on Euro investments in average. Do you know a bank that could offer you such a return?
Bondster also offers loans with unique features such as Exit from the investment or Guarantee of Liquidity. This is especially popular with Investors that are more risk averse and prefer more liquid investments. Exit from Investment means that the investor can get back the outstanding principal at predetermined points in time after the investment had been executed (after a week, month, half a year etc.) for a predefined fee. Guarantee of Liquidity allows investors to withdraw the invested amount (outstanding principal) any time for a predefined fee.
From what we have learned from our investors, our choice of Providers is really appreciated. We carefully choose our partners. Providers we cooperate with are always either well established companies in the local markets with a very good track record, or younger companies but with huge potential and experienced people with strong professional background in the management.
What are the three main advantages for loan providers?
Our partners can benefit from alternative and flexible financing we offer. In case a provider needs for example some extra funds for its development, he can upload an extra tranche of loans to our platform and receive these extra needed funds from our investors without any additional administrative burden or costs. This is a huge advantage for providers because applying for a business loan in a bank or negotiating with and raising money from big institutional investors takes much more time and is often also more expensive.
Our onboarding and due diligence process are on one hand very complex, but on the other our team is always willing to help, assist and explain and we usually manage to complete it within a few weeks.
Our team really likes challenges, and this is why we are so flexible. We always try to find tailored-made solutions.
What ROI can investors expect?
The average return on Euro investment is now 11,49 %, on Czech investment it is a bit less around 9,32 %.
How does Bondster attract, select and vet new loan providers?
… We got to the stage when the providers approach us by themselves. They learnt about us through P2P forums, blogs or influencers and realized that they can be more visible on Bondster than on other older platforms. Generally, we look for strong and established partners in the local markets or strong groups operating in several countries. We now negotiate with providers outside EU to offer our investors new opportunities for diversification.
Can you please tell us a bit about your background and the team’s background?
Well, our team has 10 members with a professional background in banking, IT, portfolio and project management, and customer care. I personally worked 5 years in banking sector which is quite rigid environment. I needed more space for my ideas. I am a kind of person that is never happy because there is always something that can be improved, right? I think I drive my colleagues at Bondster crazy sometimes because of that, but online marketplace is that kind of business that has to be always challenged and innovated to follow current trends and that is exactly why I love it.
Is the technical platform self-developed?
Partially yes, but we also outsource. The technical development of the platform is secured by one Irish company with a long-term experience in developing innovative software for banks.
How is the company financed? Is it profitable?
Bondster is fully owned by the Czech investment company CEP Invest Private Equity. At this stage, we invest all the available funds and energy into development. We want to create a platform that is not only user friendly, but also offers something extra. We want to be better than our competitors and that is why we value our investors´ ideas and appreciate their recommendations.
What were the main challenges when launching your platform?
The biggest challenge was to find the investor and a strong business partner. It is not only about the money, it is also about the expectations and philosophy. We really appreciate that we managed to attract CEP Invest Private Equity as an investor and ACEMA Credit Czech, a.s. as our strategic partner because they profess the same values. They helped us develop and also expand to foreign markets and we are very grateful for such an opportunity. Another challenge was to find right people because here at Bondster we believe that the strength of a company is in its people.
I know that Bondster attracts investors from the whole EU. But you also have loans in CZK currency appealing to local investors in the Czech Republic. Do you observe any difference in the investment approach/attitude of Czech investors compared to other nationals?
Well, Czech investors are generally more careful, they start with small amount to test the platform and its operation. Investors from Western Europe usually invest higher amounts from the very beginning.
What are your next plans? Can you share some interesting developments that are currently in the making?
We are now preparing in cooperation with one of our European providers a limited offer of loans for 15 %. This will be launched at the end of April [April 30th]. We are also preparing new features for autoinvest and new settings of filters. The long-term goal is to launch our own mobile app for investing. During summer we would also like to launch the currency conversion for investors as we have a growing number of investors from countries outside Euro zone and we want to give them an opportunity to easily convert money through our platform. And as I said before, we would like to continue working on new providers outside EU to offer enough diversification possibilities.
Where do you see Bondster in 3 years?
Our goal is to have 20,000 investors, 60 providers and EUR 80 million of loans on the platform in three years. We would like to top up with our competitors and maybe even overcome them. It would be great if we would manage to become one of the 5 best P2P platforms in Europe. We will work on simplifying our services and innovating our platform and IT solutions to serve the best to our investors.
Jana is a Relationship Manager, she manages an international team responsible for acquisition of new providers. She studied at two prestigious Asian universities and previously gained working experience in banking and export support. She is also a leading economist of Bondster.