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.

Interview with Loic Le Pichoux, CEO of Klear

What is Klear about?

Klear is a Peer to Peer Consumer lending platform. We target Prime Bulgarian Borrowers. We pre-fund the loans, then we list them on the market where investors from EU and EEA can buy parts of them.

Klear has been built by a team of professionals from the consumer credit industry. Almost all of us came from BNP Paribas Personal Finance Bulgaria, the market leader (known as Cetelem in some other countries). For example, Nikolay was the IT development team leader, Lukasz was the CFO then the Chief Risk officer and I myself was the CEO.

Klear is all about building something solid.

What are the three main advantages for investors?

  1. A good net return. 5.5% expected in average, well above the remuneration of deposits, which is close to zero. Klear does not charge fees.
  2. A low risk. We are one of the few platforms in Europe serving good profile borrowers. No subprime or payday loans customers. Such portfolio of credits should be much more resilient in case of economic downturn.
  3. An easy exit option. If an investor sells his loans without premium or discount, all the loans without bad payment history will go on the primary market.

What are the three main advantages for borrowers?

  1. The best interest rates on the market. Cheaper than the banks’. It’s key to attract excellent borrowers.
  2. Full online process. Unique in Bulgaria for prime loans. Authentication is performed through a convenient and efficient video-call. Partial or full early repayments can be done online.
  3. No hidden fees. We have a one-off fee when the loan is disbursed. That’s all.

What ROI can investors expect?

5.5% in average. Thanks to our credit scoring algorithm, we attribute a risk segment to each borrower (from A to D) and determine his interest rate based on it.

Our portfolio is mainly constituted of A and B. But investors can select the segments they want to invest in, according to their risk / return appetite.

Klear credit grades

Is the technical platform self-developed?

Yes. Everything was developed in-house. The team includes 5 software developers and a designer. Our third co-founder is an IT architect with huge experience in handling core banking systems. We invested a lot of energy building the platform: in the front end to offer a great user experience, and in the back end to ensure a solid setup.

How reliable is the credit rating / credit history data available in Bulgaria?

It’s probably one of the countries with the richest set of available data. The credit bureau registers all the credits financed in Bulgaria, by banks and non-banks, with 5 years of history.

Besides we consult the National Health Insurance database, where we can check the salary and the employment history of any credit applicant. We also consult the Police database to check if the ID card is not stolen.

The founders financed the company by committing 1 million Euro from personal savings and collecting from family and friends. That is amazing – how do you feel about this achievement?

That’s great! It shows trust in the team, in our experience, in the project and common goal. We built something to last. We all have been very successful in our careers in the banking industry and now we want to do things differently, for the better and we believe we can. That’s the main drive for all of us.

Loic le Pichoux, CEO KlearWhat was the greatest challenge so far in the course of launching Klearlending?

To explain that we are NOT a new subprime or payday loan company, like the many other non-bank institutions in Bulgaria. To demonstrate that we are providing something better than banks, for both sides, borrowers and investors.

Can you please describe the market environment and regulation in Bulgaria?

The total consumer credit market is around 5 billion Euros. These loans are issued in the domestic currency, Bulgarian Leva (BGN), but it’s important to know that Bulgaria is in a currency board with the Euro since 1999 (at that time it was with the Deutsche Mark) and the parity has not changed since. So, there is almost no currency exchange risk, when investing in Klear loans in Levas.

Although there is no specific regulation for peer to peer lending, we decided to apply for a non-banking financial institution registration in the National Bank. We have this accreditation and it gives us the possibility to consult the National Credit Bureau.

Which marketing channels do you use to attract investors and borrowers?

Since one year, we have been providing online financial education tools (an online budget management application) and a blog where we regularly publish articles regarding personal finance. That’s an efficient inbound acquisition channel.

We are also very active on social media and we perform online advertising.

Is Klear open to international investors?

Yes, to citizens from the European Union and European Economic Area, who have a bank account opened in a bank from these regions.

Where do you see Klear in 3 years?

  • Having a visible market share in the consumer credit market in Bulgaria and operations in a few other countries. As we have worked in many before and are familiar with the specificity of their domestic markets.
  • Being recognized as a fair, transparent and social impact player, also helping people who cannot get a credit by providing them financial advice and support to solve their debt issues.

P2P-Banking.com thanks Loic Le Pichoux for the interview.