mintos

Interview with Martins Sulte, Co-Founder and CEO of Mintos

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What is Mintos all about?

Mintos is a marketplace lending platform that brings together investors and borrowers by enabling various loan originators to use a marketplace lending model in funding loans. Previously loan originators established their own platforms; now Mintos offers a single platform to those non-bank lenders that seek to sell loans. This means non-bank lenders do not have to make major investments in establishing and maintaining their own platforms. By connecting to the Mintos platform non-bank lenders get an instant access to investors that are looking to purchase marketplace lending assets. Thus, non-bank lenders can focus on their core skill of originating loans.

What are the main advantages for investors?

At Mintos investors can invest in loans that are originated by various non-bank lenders that use our platform to fund their loans. The main advantage for the investors, accordingly, is that they get an access to much broader investment opportunities as part of a single platform, both in geographic terms, and in terms of various loans originated by various non-bank lenders. Investors on the Mintos platform can invest in mortgage loans, secured car loans, small business loans, and soon also unsecured loans. Loans are currently originated in Estonia, Latvia, Lithuania, and we are about to add loan originators from Finland, Georgia, and Spain. This, combined with the fact that the minimum investment in one loan is EUR 10, means that investors can easily build very well diversified investment portfolios. Also, as a result of having various loan-originators and many investors on one platform our secondary market is very liquid.

It is also important that non-bank lenders whose loans are available to investors on our platform are experienced in underwriting. The platform is used by Capitalia, for instance, which is the leading small business lender in the Baltic sates and has been lending for five years. All lending processes are orderly at the company, it has experience, and it has access to historical data. That is essential for investors who can be sure that the detailed credit analysis are preceding the granting of a loan. Moreover, the loan originators on the Mintos platform are required to retain a part of each loan on their books, i.e., to have “skin in the game” to align their and investors’ interests.

Finally, all loans on the Mintos platform are prefunded by the loan originators; thus investors can start earning from the moment of the investment and there is no cash drag. At the moment more than EUR 1 million of loan inventory is readily available for investment on our platform.

What about borrowers? What are the advantages for them?

Mintos does not issue loans, but it is important for us that the loan originators who use our platform at the end of the day can offer cheaper rates to borrowers. Also, the lending process is much more convenient at these loan originators. When borrowing money from Capitalia, for instance, a small company can expect the money to arrive in its account in just a few days’ time, usually even faster. At a bank, by contrast, that could take several weeks. Finally, some of the loan originators who use our platform provide loans and services to those borrowers who might not have had an access to affordable credit before. For instance, among clients of Mogo, the largest non-bank car loan provider in the Baltic region that is also on our platform, there are those who are seeking a car loan, with the average requested sum being around EUR 3,000. This segment is underserved by the banks.

Martins Sulte, MintosWhat ROI can investors expect?

So far the average net annual return for investors investing via the Mintos platform have been slightly below 13%. We expect the average net annual return to hover around the low double digits also in the future. However, investors should look not just at the return, but also the relevant risks. In the case of Mintos, investors can easily build a very well diversified investment portfolio across different loan products and geographies, thus reducing unsystematic risk within the marketplace lending asset category. Also, the Mintos platform was the first with a buyback guarantee where some of the loan originators buy back non-performing loans from investors, thus substantially reducing risks for investors.

What is the background of Mintos?

We started to work on the idea in mid 2014 and launched the platform in January 2015. I come from the investment banking where I spent six years before going for an MBA at INSEAD. That, actually, was the first time I heard about the peer-to-peer lending because I borrowed from Prodigy Finance, a platform that provides funding to international postgraduate students attending top-ranked business schools, while also delivering competitive financial returns to institutional and private investors. The other Martins, Martins Valters, our CFO and also a Co-Founder, has 11 years of experience from Ernst & Young where he audited some of the largest financial institutions in the Nordic region.

To fuel our growth we have raised EUR 1 million in venture capital to date. That has helped us in forming a strong team and an experienced board of directors. In a bit more than six months since the launch, more than 2,400 investors from 30 countries have registered on the Mintos platform and funded more than 1,500 loans for a total of more than EUR 4 million, of which EUR 1 million in the last month alone.

Is yours a bespoke platform?

Yes. We began work on the platform half a year before we launched it to the public, and we developed it in-house from scratch. Each marketplace lending platform has its own nitty-gritty approach, so it is best to design the platform ourselves. The Mintos platform is used by various non-bank lenders, and so we see ourselves as a technology company with a strong finance background. Currently, we have eight software developers in our team. We listen carefully to what investors say and appreciate their feedback as it greatly helps in improving the platform. Continue reading →

Mintos Announces Buyback Guarantee for Car Loans

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Mintos LogoLatvian p2p lending marketplace Mintos today announced a buyback guarantee for all car loans issed by Mogo that are currently on the marketplace or will be listed on the platform until July 31st, 2015. The buyback guarantee applies for the lifetime of these secured car loan. Under the agreement Mintos concluded with Mogo, Mogo will buy back any of those loans that are 60 or more days delinquent.

All secured car loans are originated, pre-funded, and serviced by mogo. It means that similar to real estate backed loans, Mintos puts on the platform already funded loans (and most have had a number of successful payments) and investors can start earning interest from the moment they have invested in a loan. Mogo keeps 5% of each loan on its books.

This construct provides additional security to investors – a bit like the provision funds some UK marketplaces maintain; only that in this case it currently is a limit-time guarantee.

Mintos Buyback

Mintos Starts P2P Lending in Lithuania

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MintosLatvia p2p lending marketplace Mintos announced today that it expands and now offers p2p loans – secured by cars as collateral to borrowers in Lithuania. This is the third country Mintos operates in after Latvia and Estonia. Mintos is open to international investors from Europe – the website states 1,200 registered investors from 26 countries.

The car loans in Lithuania are originated in cooperation with Mogo – a partner Mintos is already using in Estonia, where they together funded 250 car loans for a total of 300K EUR.

When investing in secured car loans investors enter in a direct contract with a borrower – similar to real estate backed loans the contract with respective borrower is transferred from Mogo to investor based on assignment. According to assignment agreement, part of the interest that borrowers pay is not assigned to investors and remains with Mogo to compensate it for loan origination and servicing. Continue reading →

P2P Lending Experiences of a British Expat Living in the Eurozone

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This is a guest post by British investor ‘JamesFrance‘.

Since retiring and leaving the UK to live in a warmer dryer part of Europe, I fortunately found myself able to live on less than my income, so had the problem of how to best manage these savings, which I wanted to protect from inflation and if possible achieve a positive return on by some type of short term investment. Unfortunately I never found a British savings account which would accept money from non residents, so I was obliged to accept a very low interest rate from my existing UK bank. I do have other long term investments so was prepared to take some risk to achieve a better return.

I had seen articles in the British press about Peer to Peer lending, which tended to refer to the big three, Zopa, Ratesetter and Funding Circle, none of which were prepared to allow a non resident to open an account, so I soon forgot about that as a possibility.   In August 2013 I read that another P2P business lending platform, Thincats, was joining the P2P finance association. I decided to look at their website and was surprised to learn that they could accept non resident investors.

Thincats is really for those with larger amounts to invest, having a minimum bid of 1000 GBP per loan, so it is difficult to achieve adequate diversification for relatively small sums without using their syndicates, which I didn’t find interesting, so I took the plunge and made 10 loans.   Needing 1000 GBP per loan meant that after that it took me some time to accumulate enough for my next bid, so I had the problem of uninvested money not earning until my next loan drew down.   I also found that some loans were repaid early which was reducing my returns because of the drawdown delays.   I think this would be an ideal platform for those with large amounts to invest, as they have a good flow of loans, there is plenty of information about the borrowing companies and once their new website is launched the process should be much easier.   A minimum 25 GBP fee for selling a loan on the secondary market makes it expensive to sell smaller amounts, which means that after several repayments a sale would not be economic.

By this time I was finding other possibilities with the help of websites such as P2P-Banking.com, where I read about isePankur in Estonia, which has an English language version and seemed ideal for any spare Euros languishing in my Euro account and only earning a secure 1% interest. isePankur now renamed Bondora, has been quite exciting to invest through as there have been many changes to the auto bidding system since I started there in September 2013, so just as I became used to the way my chioices were working out, it was all change so I had to start again to think of a good strategy.   They have been expanding rapidly and now issue personal loans in 4 European markets.   The defaut rates for their Spanish and Slovakian loans have been very high, so I have been avoiding those areas since that became apparent, which means time consuming manual investment because the auto bid system no longer allows choice of country.   I do not sell overdue loans on the secondary market, so my returns on the platform will be completely dependent on the eventual recovery of the defaulted loans, which will only become apparent after a few years.   The interest rates are high so I have accepted the level of risk involved. Continue reading →

Mintos Expands Into Estonia – Offers P2P Loans Secured by Vehicles

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Mintos LogoToday Latvian Mintos expanded by now offering loans to Estonian borrowers on the p2p lending marketplace. These loans are secured with a car as collateral. Today 15 loans were posted on the platform. Typical (nominal) interest rates for these loans seem to be between 11 and 13%. LTVs are as of today in a wide range from 26% to 90%.

Auto loanCEO Mārtiņš Å ulte told P2P-Banking.com: ‘From today we also offer investors opportunity to invest in loans secured by vehicle. We provide these loans in cooperation with Mogo (http://mogofinance.com), the market leader in car loans with operations in Latvia, Lithuania, Estonia, and Georgia. … as part of our international expansion we have set up a company in Estonia and are working on entering Lithuania and Poland to boost our loan origination capacity‘. Continue reading →

Latvia: Mintos in Disagreement with Consumer Right Protection Centre over Interpretation of Regulation

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Recently launched p2p lending marketplace Mintos is in disagreement with a consumer right protection body of the government over the interpretation of rules regulating lending to consumers and whether Mintos is conducting business within these rules or not.

Two statements were published on the internet (here and here) last Friday that state, that while Mintos has the necessary license to lend to consumers, it failed to mention during the application that it would receive deposits from third party investors and make assignment of loan parts to these investors, for which in the view of the PTAC it lacks the necessary license. In the statement the body asks Mintos to cease continuing with this practise.

P2P-Banking.com contacted Mintos CEO Mārtiņš Å ulte on Friday evening and received this comment by him: ‘To put it shortly Consumer Right Protection Centre (CRPC) has asked us to provide additional information on how peer-to-peer process works at Mintos. Before launching Mintos we did an in-depth legal due diligence and we are confident that we are working in accordance with all aplicable regulations.
The peer-to-peer (or better, marketplace) lending is still nascent industry and regulators in general around Europe are still debating on how to best respond to it. As forerunner of peer-to-peer lending in Latvia we have already had discussions with regulators and will continue to engage with them and help with information where necessary. We will hold an official press conference on Monday to encourage further discussion.‘ Continue reading →