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News Briefing - Crowdfunding, SME And Alternative Finance

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The essentials are here and will be regularly updated. If you want to be well-informed about the investment crowdfunding scene, and you're short of time, this is the place to visit.

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1.UK – P2P

P2P Finance News reports:

 

“THE COLLAPSE of peer-to-peer lender Collateral has shined a spotlight on the role of living wills in the event of a platform failure.

The Financial Conduct Authority (FCA) gained court approval last month to replace Collateral’s administrator Refresh Recovery with its own choice of BDO.

This was despite a leaked administration report by Refresh Recovery that said Collateral’s wind-down policy – or so-called living will – had been “tacitly approved” by the FCA in 2017, stipulating that the insolvency firm would take on the role of administrator if necessary.

Refresh Recovery was appointed after Collateral collapsed in February, when it emerged that the platform had been operating without the requisite regulatory permissions. However, the FCA stepped in a month later to call for its own appointment, claiming that Collateral failed to seek approval for its choice of practitioner.

Trillion Fund chief executive Theresa Burton, who is in the process of selling off the platform’s infrastructure, argued that the Collateral issue has not questioned the strength of living wills as the lender was never fully authorised in the first place.”

2. UK – AltFi

The Herald Reports a new social fund:

“SOCIAL Investment Scotland has unveiled details of its bid to raise a £5 million fund to invest in firms which set out to tackle a social problem – and build an enterprise of scale.

Launched by its SIS Ventures arm, the fund will aim to attract investment for between six and 12 “high-growth potential, high-impact enterprises”.

Investors backing the fund can qualify for both Enterprise Investment Scheme and Social Investment Tax relief, the organisation said.

SIS Ventures is aiming to raise an initial £2m from UK-based private investors, with the capital deployed over a 12 to 18-month period.”


 

 

3. UK – SMEs

SME event-driven finance is fast becoming the natural terrain of the alternative finance industry, reports Real Business.

 

“Before the financial crisis, banks dominated all areas of business lending. Alternative finance meant getting some money from your mum. But things have changed. Regulation over the past decade has forced banks to retrench. In the years immediately after the crisis, net lending to SMEs fell heavily into negative territory. Now, while banks have re-entered the market to a degree, they remain cautious around what their credit measures tell them are “riskier” loans to businesses. Business default rates haven’t changed – other than is normal over the course of the cycle – but banks’ attitudes to risk have.

Business owners complain that banks are reluctant to lend against anything but bricks and mortar. That’s particularly true of event-driven deals such as M&A, MBO, MBI, Bimbo and growth finance, because while such deals can be asset backed, cash flow or a mixture, in practice they are predominantly cash-flow based.”

 

4. International – FinTech

FinExtra reports a loan data deal.

“Banco BNI Europa, a leading digital bank, and Alterest, an innovative loan data and intelligence platform, publicly announced today their partnership to streamline investment analytics and risk management between the bank and its credit originating partners.

Initiated in Oct, 2017, the partnership comprised of data-feeds integration with tech-enabled lending platforms, implementation of a reconciliation process between operations and nostro accounts, and configuration of an IFRS9-compliant impairment calculation model.

A leading provider of capital to marketplace lenders in Europe, Banco BNI Europa has already established investment programs with prominent lending platforms. It has successfully utilised leading technologies to provide finance to a range of consumer and business borrowers efficiently and has become a role model for banks across the continent.”

5. International – FinTech

In a gesture that may show poor understanding of crypto generally, the Vietnamese Ministry of Finance has proposed a temporary ban on imports of crypto mining equipment to the country, reports Crowdfundinsider.

“According to the Hanoi Times, the Ministry gave two reasons for the proposal. First, “The act of issuing, providing, and using illegal means of payment (including Bitcoin and other cryptocurrencies),” has been prosecutable in Vietnam since January 2018.

Second, the government is seeking to prevent more incidents of domestic crypto fraud like one exposed in April in which a company called Ifan allegedly bilked Vietnamese investors out of 15 trillion VND (about $658 million USD).

VN Express reports that in early April, Vietnamese Prime Minister Nguyen Xuan Phuc called for strict regulation of crypto industries in the country, “after many companies began trying to attract people into investing in new cryptocurrency ventures – Initial Coin Offerings (ICOs).”

VN Express also reports that imports of crypto mining rigs into Vietnam have almost tripled this year.

In April, Goldman Sach’s economist Jim O’Neill identified Vietnam as one of 11 “high-population, high-potential” countries that  could see its economy flourish in the 21st century.

This and other indicators have led to an increased interest in Vietnam by foreign companies eager to position themselves well and facilitate a possible economic boom in Vietnam.”

 

6. International – FinTech

Notorious crypto exchange Bitfinex had its services suspended for three hours May 5th in a Distributed Denial of Service (DDos) attack that flooded Bitfinex’s online operations and overwhelmed its site, reports Crowdfundinsider.

“The platform is under extreme load. We are investigating,” wrote Bitfinex on its website status page.

The DDoS attack was preceded by another outage at Bitfinex earlier on the same day in which operations were paused due to, “issues with one of our infrastructure providers.”

The second attack followed closely on the heels of the first issue. “While the platform was recovering (from the first outtage), the (DDoS) attack caused extreme load on the servers,” the Bitfinex status page states.

Bitfinex users are perhaps especially antsy because of numerous claims that the exchange is on very thin ice for having issued hundreds of million of its so called “stable coin” Tether, a crypto the exchanges purports is backed 1-1 by bank holdings of USD.

Despite close to a year of public demands that they do so, Bitfinex has never furnished a credible audit of Tether.

A lawyer for the prolific researcher and persistent Bitfinex critic “Bitfinex’d,” recently warned Bitfinex that if they were ever connected to numerous threats his whistleblower client, they’d be held accountable in court.

According to the site Digital Attack Map, DDoS attacks are inittiated after hackers create networks of computers infected with malware sent through malicious emails. Infected computers can then be used together as “botnets” that point coordinated floods of info at important computer systems and websites.

Systems becomes overwhelmed by fake traffic and cease to function properly.

According to Digital Attack Map, some botnets involve thousands of hijacked computers, and “some attacks are so big they can max out a country’s international cable capacity.”

“Specialized online marketplaces exist to buy and sell botnets or individual DDoS attacks. Using these underground markets, anyone can pay a nominal fee to silence websites they disagree with or disrupt an organization’s online operations. A week-long DDoS attack, capable of taking a small organization offline can cost as little as $150.”

 

7. International – P2P

India’s Economic Times reports a market initiative.

“Peer-to-peer lending platform Faircent is expanding its distribution base as it looks to accelerate its growth this year. Rajat Gandhi, CEO, Faircent, told ET that the company was actively looking at partnerships to increase its borrower and lender base. 

“We are looking at alliances with wealth management firms and digitallysavvy direct-selling agents who already deal in financial products like stocks, mutual funds and insurance,” he said. Alongside, the company will strengthen its own own existing network. 

Faircent recently received the NBFC P2P lending licence from the RBI, making it the first P2P firm to get the certification. It closed 2018 at a run rate of Rs 25-30crore, said Gandhi, growing four times over the previous year, and has set itself a target of Rs 80 crore in this fiscal.”