Compared to the beginning of July the interest rates for newly issued EUR loans on Mintos are much lower now. While investors enjoyed interest rates of up to 13-14% for loans issued in the first half of the year, typical rates are 8-11% now, with a 12-13% for more exotic loans mixed in.
Cause of the change in market condition was that Mogo, one of the larger loan originators on Mintos, issued a bond worth EUR 50 million, with an annual interest rate of 9.5% (ISIN XS1831877755) on June 25, 2018 and Mogo announced that starting from July 13, 2018, Mogo would partially repurchase loans from investors on Mintos using their call option as stipulated in the assignment agreement. During July, Mogo plans to gradually repurchase in total up to EUR 16 million net of loans issued to borrowers in Bulgaria, Estonia, Latvia, Lithuania, Poland, and Romania.
Following the repurchase, the interest rates for newly issued EUR loans were sharply lower not only for Mogo loans but also for loans of the other originators on the Mintos platform.
This left most investors with a lot of cash in their accounts, as commonly 1/3 to 2/3 of all the Mogo loans in their portfolios had been repurchased and their previously configured autoinvests did not match any loans any more at their set interest rates.
To find out how investors reacted to the situation P2P-Kredite.com conducted a survey among German speaking Mintos investors. Here are the preliminary results (48 respondents):
35% say they withdraw uninvested cash and invest it on other p2p lending platforms
21% say they continue to invest on Mintos primary market
17% say they just wait, the interest rates will rise again
15% say they withdraw uninvested cash and invest it in other asset classes (e.g stock)
12% say they buy on the Mintos secondary market now, instead of using the primary market
For continental European investors looking for high yield alternatives here are 5 platforms that survey respondents liked:
Bondora Bondora is a long established Estonian company offering consumer loans in Estonia, Finland and Spain. Investors can choose between their new “Go&Grow” product (up to 6.75% interest) or the self-select autoinvest options with individual loans yielding much higher (nominal) interest rates
Estateguru Estateguru is a marketplace for property secured loans mostly in the baltic countries. Typical interest rates are 10-12%. Investors pick individual loans or enable autoinvest
Grupeer Grupeer is a young Latvian platform gaining popularity among the German investors. They list business and development loans in several countries (e.g. Latvia, Russia, Belarus, Norway, Poland). Typical interest rates are 14-15%
Peerberry Peerberry is a young Latvian platform listing consumer and property loans in several countries (e.g. Lithuania, Poland, Czech Republic, Ukraine). Typical interest rates are 11-13%
Robocash Robocash is a Latvian platform listing consumer loans in Kazachstan and Spain. Typical interest rates are 14-14.5%.
This selection is based on the likings of German speaking investors that voted in August for best p2p lending platform in a P2P-Kredite.com survey:
51 respondents, platforms that got no votes are not shown
The survey shows that Mintos is still rated number one in investor opinion among the queried audience, but the others are catching up (compared to similar surveys in the past).
My own Mintos portfolio shrank to less than 40% of its previous size as only less than 1/3 of the Mogo loans I had in early July are still in my portfolio. I withdrew a lot of cash and have transfered it to other p2p lending market places. Of course I’ll hold on to the my remaining Mogo loans as nearly all of them are at 13-14% interest rate.
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 listed in the table adds up to 449 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.
The table lists the loan originations of p2p lending marketplaces for last month. Zopa leads ahead of Mintos and Ratesetter. I delisted Funding Circle from the table as they announced they will only update figures quarterly now (was daily). Furthermore they have withdrawn the downloadable loanbook. The total volume for the reported marketplaces listed in the table adds up to 380 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 (overall volume since launch):
Alla Kisika: Grupeer is all about people! We have created the platform which is based on 3 pillars:
Security (protection)
Technologies (efficiency)
Benefit (profitability)
Our platform is not just the bridge connecting the borrower and the investors, Grupeer is a transparent environment in which the investors can feel safe, receiving fast and clear high profit, using the latest technologies.
What are the three main advantages for investors?
Vladislav Filimonov: As mentioned, the financial safety of our investors is our main priority. First of all, the number of outstanding or default transactions it is equal to zero. This indicator is reached only to our rigid scoring which eliminates nearly 75% of the loan originators interested to place the projects on our platform. The reverse side of the coin is lack of variety of the projects.
Secondly, we give a unique opportunity to diversify the portfolio, investing in business loans or in development projects within one platform.
And last but not least, all of our loan originators provide BuyBack guarantees for each project. Besides, our investors get access to all financial information of the borrower of the project. To convince of our advantages, we offer the minimum sum of the contribution of 10 EUR, we are sure that after the first experience, the investors will become our loyal customer!
As for development projects, in many scenarios, the management members of Grupeer are acting as a shareholder to have a full control towards successful implementation of it.
What are the three main advantages for borrowers?
Alla Kisika: To clarify, Grupeer doesn’t issue the credits and we are working with legal entities only.
“Fuel for your business.†The borrower has a possibility of refinancing due to the services of our platform, and it means that, the company will get the financial resources or as we call it – fuel to grow the company at the velocity of the rocket.
The size doesn’t matter. We consider borrowers of all sizes. And experience has shown that size doesn’t matter. Even if the borrower is small, but with good financial history, we are ready to provide favorable credit rates, fast result and high-quality services to grow together!
Great Customer Experience. We are sure that services and the ideas can be copied but what really distinguishes is the way the service is provided. Customer satisfaction is our Top priority. We practice the individual approach to each partner from the beginning to the very end.
What ROI can investors expect?
Alla Kisika: We can proudly say that now the average net annual return of Grupeer is 14.25% and it is the highest annual average rate on the market. Most of our projects have the stable interest rate of 14%, some of them, for example, the most loved by German investors- Finsputnik Platforma SIA projects have 15% interest rate.
It should be mentioned that there is no correlation between a high interest rate and the increased risk. Such high-interest rate is stipulated by company’s policy and marketing strategy which makes our platform attractive to check the mechanism of return of percent and principal.
Grupeer offers a wide variety of loans from several countries. How do you succeed in sourcing and checking these loans?
Vladislav Filimonov: As mentioned above, we don’t offer a wide range of the loans from the different countries but considering that we could critically improve our scoring system that pays off for 100% (we would like to remind that the number of expired and default transactions is equal to zero). Besides, our sales team started to work on attracting the new projects therefore soon we will please our investors with many new projects.
How did you get the idea to launch a p2p lending marketplace?
Alla Kisika: Life gave the idea of the platform development. In due time, the founders of the platform had a very serious project regarding the construction and commissioning of the Thermal power plant. At some point, when a large amount of financial means has been already invested and very little remained before the end of the project, the need of additional 3 million euros has appeared. Founders have faced a problem of the full amount as someone wanted to invest only 500’000 EUR, someone 1’500’000 EUR and these people were not friendly with each other therefore a certain sum of money hasn’t been collected till the deadline and the project was closed. And the conclusion was obvious –  human relationship shouldn’t influence implementation of the projects and that it is necessary to develop the platform which will provide such an opportunity. And Grupeer platform has been developed for this purpose.
Can you please tell us a bit about your background and the team’s background?
Vladislav Filimonov: Force and success of our company is our employees. From myself, I have gained a massive experience in leading Large Group of Multinational Teams as a Vice-President of Mastercard and while working in Pay Pal. This experience is now spread across all functions of Grupeer to make it even more investors-oriented platform.
Below you can meet some of our team members:
CEO – Andrey Kisiks is the professional developer with 20+ years of experience in European Union. Fields of activity: construction, residential real estate projects development, construction and operational commissioning of complex technical objects (Power Supply), Finance and Peer-to-Peer.
CMO – Leonid Tenkaluk is experienced Digital Marketing Manager with a demonstrated history of working in the information technology and sales industry. Skilled in Team Management, Marketing Management, Negotiation, E-commerce and Entrepreneurship.
We very thoroughly select our employees, as our loan originators. In April of this year, several strong experts joined our team, and, in a few months, we are planning to double the number of our teammates to boost our team and to be able to go from “good†to “great.â€
Is the technical platform self-developed?
Vladislav Filimonov: Yes, our technical platform is 100% self-developed without using some “ready-to-use†software products. Besides that, we did not use any outsourcing services. The basic part of the platform is developed, but we continue to improve it on daily basis. We are planning to add several innovative solutions for the more convenient use of our platform in near future.
How is the company financed? Is it profitable?
Alla Kisika: The company is self-financed. As we have only started to conquer financial oceans, we didn’t manage to generate profit yet, but we are planning to reach a break-even already in the next year.
What were the main challenges when launching your platform?
Alla Kisika: As in any innovative field under that is not regulated by law we have faced several the bureaucratic issues which we are solving successfully. Secondly, we have spent a lot of time on development of the reliable scoring system to minimize any investor’s risks. And the main challenge today is to get our values over to the audience and to earn its trust.
Is Grupeer open to international investors?
Vladislav Filimonov: Yes, we are. Now, we work with investors who are EU residents. Soon, we will certainly expand our geography.
Where do you see Grupeer in 3 years?
Vladislav Filimonov: Our main objective in following 3 yeas is to become a leader service provider of the alternative investment market in EU. We don’t want to open plans prematurely, but we are planning to become the conductor to unique products in this market. To prove ourselves as the most innovative, safe and favourable platform.
You have one wish, that the regulator will fulfil. What is your wish?
Vladislav Filimonov: As they say – be careful what you wish for, you may receive it. Our sole ambition is the liberal relation to this field as P2P business is very perspective alternative for World economy.
P2P-Banking.com thanks Alla Kisika and Vladislav Filimonov for the interview.
The table lists the loan originations of p2p lending marketplaces for last month. With the most recent Funding Circle figures not available at the moment, Zopa leads before Mintos. 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 Grupeer.
Milestones achieved this month (overall volume since launch):
Table: P2P Lending Volumes in May 2018. 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.
Bondora has been rolling out a new product called Bondora Go & Grow to select users since March. It will be officially launched in June, but existing users can contact support and ask for the product to be made selectable in their accounts.
Go & Grow is designed for the passive investors as hands off p2p lending. One of the main advantages is that Bondora says it is tax optimised.
The Bondora Go & Grow product features a target interest rate of 6.75% which will accrue daily. It runs completly on autoinvest. The investor just needs to join it and pay money into the Go & Grow account (or transfer it from the normal Bondora account). The Go & Grow account promises daily liquidity. There is a 1 EUR withdrawal fee making small withdrawals expensive but for portfolios of 1000 EUR or more and usual investment horizons this fee is negligible.
How does Bondora Go & Grow work?
Simplified it is an autoinvest tool where Bondora invests the deposited money in loans on the Bondora marketplace (the investor does not see the individual loans). The investor automatically sells any claims for repayments and interests from these loans to Bondora which in return agrees to pay the 6.75% interest to the investor. Note that the 6.75% are not guaranteed but Bondora is very confident (based on their over 10 years experience) that they can achieve this yield. So basically Bondora invests the money on the market’s interest rates which are higher than 6.75 and the results influenced by defaults, late payments and cash drag, but Bondora is confident they are higher than 6.75%. Bondora pays the 6.75% to the investor and uses the surplus as reserve, which will be kept separate from Bondora’s funds.
What does tax optimized mean?
Bondora mentions two advantages:
The product is net of any defaults. This can be advantageous for investors in countries where it is not possible to offset default losses againts interest earned for tax purposes.
Interest accrues and is only credited at (final) withdrawal. This delays the point in time where interest is taxable according to Bondora.
So is this better than the ‘traditional’ Bondora product?
In my opinion this product is only the better choice, if the investor really does not want to be bothered with making minimal choices the Portfolio Pro requires and some monitoring. As described Bondora invests the money in the very same loans that are available in the traditional product and expects a higher yield than 6.75%.
For that very same reason I would caution investors to carefully consider, if they do want to take up the offered option to sell out their existing ‘traditional’ portfolio when opening/funding a Bondora Go & Grow account. I assume that investors are very likely better off keeping that portfolio than selling it to Bondora at the price Bondora offers. However for an investor that really wants to sell an exitsing portfolio completly this offers a way to cash out (edit: see reader comment below) as the cash is than in the Bondora Go & Grow account and can be withdrawn instantly.
One caveat of course is that according to the T&C the liquidity for Bondora Go & Grow is subject to market conditions and not guaranteed. It reads a bit like the ‘normal market conditions’ wording that Assetz Capital uses for its Quick Access Account.
