Barclay’s Bank Africa Acquires 49% Stake in P2P Lending Service Rainfin

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Barclays Africa Group Limited (BAGL) has acquired a 49% stake in South African p2p lending service Rainfin. The investment amount is stated to be ‘tens of millions of rands’. Rainfin says it wants to use the money to grow the business and improve the product.

Rainfin launched in July 2012.

CEO Sean Emery on the investment of BAGL:

We have known for a while that we would need a partner to take RainFin to the next level, and chose BAGL after a loan search because it has a vision that aligns closely with ours. BAGL’s support will enable us to offer exciting new products in areas such as supply chain finance, enterprise development funding, fixed asset purchases and even mid-sized corporate debt. It will also clear the way for us to expand into new markets.

The BAGL investment in RainFin comes at a time when there is a lot of movement in the global peer-to-peer industry from the UK and US to China and India. In the US, peer-to-peer lenders such as Lending Club and Prosper are enjoying triple digit growth and venture capital firms like Sequoia Capital and Blackrock are investing in the industry.

Worldwide, we see banks, hedge funds, and institutional investors all exploring ways to collaborate with peer-to-peer lenders with City Group, Capital one, Bank of Montreal and Deuce Bank buying up loans originated through those platforms. With institutions moving into the market, peer-to-peer loans have truly come of age. BAGL will do the same to make our concept of peer-to-peer lending a mainstream finance option in South Africa.

Whether you’re a lender or borrower, rest assured that our main focus remains on bringing together creditworthy borrowers and smart lenders so that both parties can benefit. Our platform will remain as transparent as ever, and we will continue to put you first as we move forward into the future with our partners at BAGL.

We thank you for your early support of our business and of the early stages of peer to peer lending in South Africa. We look forward to moving into the future with you and with our new partners at BAGL.

Update: An earlier version of this article reported figures which were not up to date. Please see the comment by CEO Sean Emery for recent figures.

Peter Renton Starts Fund

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Peter Renton, well known blogger at Lendacademy and founder of the Lendit Conference starts a fund (Lend Academy Investments LLC) that will invest in p2p loans at Prosper, Lending Club and Funding Circle. Co-founders are Jason Jones, a former hedge-fund manager, and Bo Brustkern, a valuation expert. The fund will raise 28 million US$ this year and aims to raise 100 million US$ from investors by the end of 2015.

(Source Bloomberg & other)

International P2P Lending Services – Loan Volumes February 2014

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Even though February was a short month, several p2p lending services topped their January loan volume. Even more impressive is the continued year on year growth. 3 more services were added to the table. I do monitor development of p2p lending figures 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 services.

Table: P2P Lending Volumes in February 2014. Source: own research
Note that volumes have been converted from local currency to US$ for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

How To Filter Isepankur Loans to Reduce Risks and Achieve Higher ROIs

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As you all know, if you are a regular reader of this blog, I have been investing on the Isepankur p2p lending service for over a year. So far, I’m doing pretty well – Isepankur consistently ranks me into the top 10% of investors by achieved ROI. But I have to admit that my strategy was just based on common sense (or call it gut feeling), some general p2p lending knowledge and experience won over time. Of course I obeyed fundamentals like diversification.

Now Isepankur is one of the first European p2p lending marketplaces that made available the raw loan data for everyone. You can download it here.

What does the data export contain?

The data export contains over 50 parameters for each loan that Isepankur orginated since February 2011. Isepankur says new datasets will be published monthly.

How do I analyse the data?

A sophisticated person – or a statistican – will rightly recommend to use multivariate statistics to most accurately get conclusions from analysing this loan data. I don’t have the tools or the expertise to do that, so I thought I just give it a try and look how far I get in Excel. By the way – this is going to be a rather long blog post, but I think you’ll find it worthwhile.

First I defined a population of loans (universe) I wanted to look at. I selected Estonian credit grade “1000” loans (thereby excluding other credit grades and Spanish and Finnish loans) to get a somewhat homogeneous loan population. Initially I looked at loans with the parameter ‘TwoMonthsFromFirstPayment’, in order to look only at loans that are old enough to default. Later I also excluded loans that originated after Sep. 1st, 2013.
That leaves me with a population of 1325 loans to analyse.

What I want to find out

I am trying to find factors in the loan application that indicate an above average probability that a loan will go into 60+ days overdue. While Isepankur actually still recovers large parts of the principal of loans that go into 60+ days overdue (see these useful charts), it would still be great if I as an investor could reduce the percentage of my investments that become 60+ days late. There is a parameter in the download named ‘InDebt60Day’. This is what I analysed. Note that the description says ‘This loan has at one moment been overdue for 60 days’, meaning it does include loans that are now current again, or even paid off. But if we want to reduce the risks of a loan ever going into 60+ days overdue this is the parameter we want to look at.
For 126 of the 1325 loans this parameter is set to ‘1’, meaning the average risk is 9.5%. What does that absolute number tell us? Nothing much yet, it is just a reference point I’ll use to show above average and below average risk loans.

Let’s start

Okay, I downloaded the data set into Excel and excluded all loans other than the population described above. Now I use the pivot table function of Excel to look at the data.

One easy finding is that gender influences the 60+ days risk (from now on I’ll just call it risk in short).

I marked the percentage for loans to men that has ‘InDebt60Day’=’1’ orange as it is considerably above average and the percentage for loans to woman green as it is considerably below average. Continue reading →

Isepankur Adds Slovakian Loans Starting Monday

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P2P lending service Isepankur will open to borrowers in Slovakia starting next Monday. While Isepankur is open for lenders from all over Europe this is the fourth borrower market after Estonia, Finland and Spain. I contacted CEO Pärtel Tomberg and he told me:

Slovakia is a small market with a very strong potential. We have already gathered a great deal of in small markets Estonia, a market roughly 20% the size of Slovakia, and in Finland, same size as Slovakia in terms of population, and will be looking to translate this into a successful launch. The market is quite similar to the markets mentioned earlier with a small number of large banks and lack of alternative offers to the consumers. There is a general lack of affordable and easy-to-use credit products and we will be looking to fill that void with our offer that will be very similar to what we have in Estonia, Finland and Spain. Our target would be to generate approximately 4 million euro of monthly loan volume in Slovakia in the matter of 2-3 years however as always we will start small and conservatively to ensure that only quality loans are offered to the investors.

To apply for a p2p loan the minimum income criteria borrowers from Slovakia have to fulfill are listed in the investment guide. They are roughly the same as for the Estonian borrowers. Continue reading →