News

April 4th 2016, Daily News Digest

  • Marketplace lending securitization growth unchanged in Q1 2016 (Peer IQ report).
  • Loan-portfolio valuation companies seeing a lot of interest.
  • Lending Club looking at Securitization with Guggenheim.
  • Financial Times contributor claiming Fintech revolution is just a mirage.
  • Santander UK teams up with Kabbage and expects job cuts.
  • SME Lending in France.
  • Report covering the crowdfunding industry in Europe.

PeerIQ MPL Securitization Tracker (1Q2016), (Peer IQ), Rated: AAA

PeerIQ released the PeerIQ MPL Securitization Tracker (1Q2016). The quarter saw six deals totaling $1.5 billion in issuance, representing strong 20% growth in cumulative issuance, though down from the $1.9 billion across 9 deals we saw last quarter—a result not surprising in light of the capital markets jitters experienced in January.  The steady performance and strong finish reveals that securitization remains a vital funding source for the sector.

 

Marketplace Securitizations Peer IQ 700

 

Online Lenders Enlist Silicon Alley to Avoid Next `Big Short’, ( Bloomberg Technology), Rated: AAA

Fund manager Don Davis (Prime Meridian Capital Management) had been buying online loans for several years when there was a spike in calls from worried clients.
Davis has tried to reassure clients with the help of data from a company called MonJa.

Though Davis considers some investors’ fears overblown, he says MonJa data saves his firm time and money.

“Loans are extraordinarily difficult data-wise to capture if you don’t have a specialized system,” said Brian Weinstein, chief investment officer at Blue Elephant Capital Management. “There are already hundreds of thousands of existing loans with different underwriting methods, different data methodologies and different reporting.”

Now that investors are paying closer attention to peer-to-peer lending, fintech upstarts like MonJa, PeerIQ, Orchard Platform and dv01 see their opportunity.

The fintech startups are having no trouble attracting investors of their own. Victory Park Capital, a private equity firm, is a PeerIQ customer and also contributed to the startup’s $2.5 million funding round in September. Meanwhile, dv01 secured a $5 million investment from Soros Fund Management and Jefferies Group LLC, according to a person with knowledge of the matter.

For now, demand for Orchard’s services is rising, and its customer base widening, says David Snitkof, the New York firm’s co-founder and chief analytics officer. It’s not just the early adopters such as hedge funds and family offices anymore, he said. Other entities, such as closed-end funds — companies that raise capital through an initial public offering and then trade like a stock on an exchange — also want the data.

LendingClub Said to Hire Guggenheim to Help It Securitize Loans, (Peer IQ), Rated: A

Comment : starting to look at securitization in the present climate may signal that Lending Club is really lifting every rock looking for lending capital.

LendingClub has hired Guggenheim Securities to help it set up a program for bundling its loans into bonds, three people with knowledge of the matter said. The company hopes the program will cut its funding costs and boost profits, but it does not plan for the bonds to become its main source of outside financing. LendingClub finances itself now mainly by selling loans to individual and institutional investors through its website. Company spokesman Steve Swasey declined to comment, as did Guggenheim spokesman Anthony Lacavaro.

Investors should ignore the hype about fintech, (Financial Times), Rated: AAA

Yet despite all the excitement and money [in Fintech], we have yet to see a fintech equivalent of Skype or Amazon emerge. There has been very little innovation and nothing truly transformational.

Allegations that crowdfunding platforms have been encouraging companies to drip-feed money from other sources into their campaigns — to create the impression of investor demand — is much more disturbing.

The P2P lending sector is perhaps more worrying. Here we have a group of companies whose success is based on the speed at which they are selling loans. I do not doubt that they had the very best of intentions when they began, but having raised hundreds of millions of pounds’ worth of venture capital finance, these companies will be under intense pressure to maintain their much vaunted growth rates.

True innovation will come. It might even emerge from London. But for now, fintech is nothing more than a mirage.

The writer is CEO of Mangrove Capital Partners

Santander UK teams up with Kabbage to offer fast loans to SMEs , (Financial Times), Rated: AAA

The bank has teamed up with the US fintech company, in which Santander invests, to speed up the underwriting process so businesses can potentially access working capital of up to £100,000 online on the same day.

The bank will launch the service on Monday at the Money 2020 conference in Copenhagen. Santander partnered with Funding Circle in 2014.

Kabbage speeds up lending decisions by using risk-scoring determined by Santander, with the fintech company’s own information and external sources of data, including social media.

Atlanta-based Kabbage, which launched in 2011, raised $135m in October from Santander via its InnoVentures fund, ING, and Scotiabank.

The bank’s Spanish parent also announced the creation of a digitally focused advisory board a few weeks ago, naming Lawrence Summers, former US Treasury secretary, as chairman.

Santander job cuts loom in the UK as bank plans digital expansion, ( Computer Business Review), Rated: A

Comment: Interesting based on the article just above.

Santander UK could be set to axe a number of senior staff as it looks to free up cash for digital expansion.

The bank has already signalled plans to close up to 450 of its 3467 branches in Spain this year as part of the company’s move to accelerate plans to move to cheaper digital channels.

Competition from smaller, more agile banks that are utilising technologies such as cloud to disrupt traditional financial services has resulted in increasing pressure to innovate.

SEC chief warns Silicon Valley about ‘unicorn’ valuations, ( The Australian Business Review), Rated: A

Ms White also said the SEC was closely monitoring financial technology, or fintech, an area that includes start-ups such as Prosper Marketplace and LendingClub, which make online loans to consumers and small businesses and then sell the debt to individual investors and hedge funds. She called on such platforms to provide more information about the loans, including data on the borrower’s ability to repay.

The SEC was “concerned about the adequacy of the information received by investors in registered offerings”, she said, adding that investors should know more about “the platform’s proprietary risk and lending models”.

“Innovation in finance is welcome, but it must be built upon the disclosure of material information, which is the bedrock of the federal securities laws,” Ms. White said.

Lendix Passes €15 Million in Lending to SMEs in France, (Crowdfund Insider), Rated: A

Lendix, SME originator in France, states that it is the market leader in P2P SME in France having captured 40% of the market  – approximately twice the size of its nearest competitor.  Lendix expects to top €50 million over the next 12 months. Since originating its first loan in 2015, Lendix had raised €15 million in loans to finance 77 SME projects.

According to information posted on the Lendix site;

  • 42% of loans are for business growth purposes
  • 25% of their loans are for tangible asset purchases
  • 17% are for renovations
  • 8% to refinance current credit accounts or vendor receivables
  • 7 projects have been financed with loans ranging from €500,000 to €1 million

CrowdfundingHub Publishes Report on The State of Crowdfunding in 27 Countries, ( Crowdfund Insider), Rated: A

The CrowdfundingHub, based in the Netherlands, has published a report on the state of the crowdfunding industry in 27 different European countries.

You may download the report here after you hand over your name and email address.

CrowdfundingHub-Report-countries

Where to park your money, (San Diego Downtown News), Rated: B

High-yield savings account at an online bank at up to 1.05 percent annually.

Short-term bond fund, 5 year average of 1.33%

Or Peer-to-peer (P2P) lending. Many of these P2P lending sites are publishing rates of return between 5% and 30%, prior to their fee.

 

 

Author : George Popescu

About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( www.currencymountain.com ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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