News Briefing - Crowdfunding, SME And Alternative Finance

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1.UK – P2P

 

P2P Finance News on developments at Wellesley:

 

“WELLESLEY Group has reported £107m of lending in the final quarter of 2017, which is almost double the amount lent in the same period the previous year.

The alternative property lender said on Tuesday that the funds will support the construction of over 700 new homes across the UK. It provided finance to nine housebuilders over the last three months of 2017, with an average loan size of £11m.

In the last quarter of 2016, Wellesley lent out £54.6m.

Wellesley re-positioned its business in 2016, targeting the more affordable end of the housing market. It said that 70 per cent of these new houses built with Wellesley funding will be sold for £300,000 or less.

“The 2017 Budget contained several measures which demonstrate government support for housing up to this price point which is expected to further underpin this segment of the market,” Wellesley said.

As part of its shift in strategy, the lender has also moved away from smaller, bridging type deals and towards larger development loans.”


2. UK – P2P

Crowdfundinsider reports sustained investor enthusiasm for the P2P sector.

Goji, the UK-based specialist direct lending investment manager and platform, secured an undisclosed multi-million pound funding round from investors including Anthemis’ Venture Fund 1 (AVF1) and AXA Strategic Ventures (ASV).

“Confidence in direct lending as an asset class is picking up pace and the investment Goji has received from Anthemis and AXA Strategic Ventures, both highly regarded industry players, is testament to this,” stated Goji CEO Jake Wombwell-Povey. “We believe we are in a perfect storm; equities are considered by many to be overvalued, traditional fixed income and cash are yielding well below inflation and investors need a new solution. Within this context Direct Lending can deliver positive investor outcomes in a fairer, more purpose-driven way.”

The funding will allow Goji to develop its platform and product pipeline, including the Diversified P2P Lending Bond. The round led by Anthemis, a leading global fintech investor which has backed companies including Betterment, and AXA Strategic Ventures, aims to set Goji as a pioneer for direct lending assets in the financial adviser market.” 

 

3. UK – P2P

 

P2P Finance news on the latest cryptocurrency raise:

“THE CO-FOUNDER of peer-to-peer investor BondMason is backing the launch of a cryptocoin aiming to provide a digital currency for those living in areas with high inflation or under-developed banking systems.

Stephen Findlay, chief executive of BondMason, is working with global cryptocurrency expert and University of Cambridge Research Fellow, Dr Garrick Hileman on ARC Reserve Currency.

The project is separate to the work of BondMason and the idea is to use an initial coin offering (ICO) to create a tradeable ‘stablecoin’ – a form of cryptocurrency that is asset-backed so is less volatile than others such as Bitcoin – called ARC.

This will be achieved by proceeds from the ICO being placed into a ring-fenced, not-for-profit company called ARC Fiduciary Ltd which is regulated in Jersey by the Jersey Financial Services Commission.

The proceeds are then held in cash reserves and invested into fixed income opportunities to retain value for the holders of ARC coins.”

4. International – P2P

CNBC reports a favourable policy and investment climate for FinTech and P2P in China.

 

China's burgeoning financial technology industry went through plenty of ups and downs last year, but growing pains experienced in the sector aren't fazing one local player.

Growth in the fintech space — which encompasses everything from peer-to-peer lending to insurance technology (insurtech) — has been rapid. And that's been on top of a sector that was already estimated to be worth more than 12 trillion yuan ($1.8 trillion) at the end of 2015, according to McKinsey.

Last year saw multiple Chinese fintech firms, including QudianPPDaiHexindai and Jianpu, launch initial public offerings in the U.S.

But increased competition in the space doesn't suggest the sector is overcrowded, according to David Ye, the co-founder and CEO of Jianpu Technology.

"Keep in mind: The market is huge ... The growth has just started," Ye told CNBC on the sidelines of the Morgan Stanley China Technology, Media & Telecoms Conference in Beijing.”

5. International – P2P

Café Mutual runs a piece aimed at helping IFAs find a good platform for their clients.

“Peer-to-Peer lending is finding its way in India and is fast gaining popularity among investors looking for unconventional ways to earn good returns on their investments.

However, like all other regulated products (MFs, equity, bonds etc.), this promising sector too is not without its risks. In P2P lending, risk is related to the probability of borrowers defaulting on payments and the underlying loan repayment performance which involves lenders in getting their loans repaid. So, it is important to ask your client to do their homework before they lend.

Here are some risk mitigation strategies which your client can implement in P2P lending:

·       Check the platform's credit rating of borrower- Your client can easily minimize the risk of lending by checking if the borrower is creditworthy. P2P platforms enlist borrowers after checking their creditworthiness through different processes. So, make it a point to understand the method in which the P2P platform enlists its borrowers as your client won’t meet the borrowers enlisted on that platform personally.

The more thorough the credit rating process, the higher the chance of finding good borrowers and the risk would automatically reduce.

·       Check the borrower’s creditworthiness yourself - Risk mitigation should continue even after the lender and borrower reach an agreement. Ask your client to look for the creditworthiness of the borrowers personally even after he has assessed the platform's rating process. Closely assess the insights provided by platforms to understand his capability and intention to repay.

·    Diversification of portfolio - Diversification is a crucial step that many P2P lending platform such as Monexo offer to lenders to mitigate risk. Investing small amounts across a large number of borrowers is likely to keep the default rate at a reasonable and consistent level. Segregate your investments and choose borrowers from different segments to lend to. This way, your clients can minimize the risk of default.

·       Insurance scheme to protect lender’s principal against event based risks- Ask your clients to tie-up with life insurance companies that will help them avail insurance to protect themselves from default in case of unforeseen situations like accidents, sickness, and death of the lender.

·       Look for a platform that assists in loan recovery- Borrowers might still default on their loans even after one takes precautions. To mitigate the risk of losing investment, ask your client to register on those platforms like Monexo that have a support system in place to help you to collect on defaulted loans.”