Analysis Featured

Editorial: Chinese regulation, fundraises, rates and student loans

This week’s biggest news has been the new Chinese p2p market regulations. Yirendai’s stock fell from a high of $37.50 to a low of $20.40 and is at $21.86 by market close on Friday. The fall attracted a slew of equities lawsuits which did not help the stock.

In the meantime in the US we have seen quite a few fund raises recently:

  1. River North Marketplace Lending Corp launched a $1bil fund dedicated to marketplace lending.
  2. Fundation Group $100mil from Goldman Sachs
  3. Behalf raised $27 mil
  4. LendUp’s $47mil
  5. Camino Financial $2mil
  6. LoanDepot raised $150 million
  7. Elevate Credit $545 million credit facility at the end of July

In the UK, Zopa released their 2015 numbers showing a doubling of their origination volume from 2014 while expenses went up by 45% only. In the same time, on Friday Zopa announced they will reduce their interest rates by 0.2%.

We have seen the US FED increase rates in the spring and Lending Club and Prosper follow up on the increase. We are now seeing Zopa (and likely the rest of the UK p2p lenders) follow up on the rate decrease of BoE. In the meantime, P2P lenders in Australia are growing aggressively while their central bank rate is 1.5% and ANZ bank’s savings interest rate is 3%, for example.

Many people wonder how central interest rate changes affect the P2P lending market. It appears that it doesn’t affect it very much when it changes by a few points. Everybody is speculating how a larger increase in interest rates will affect the market. For now, we can only speculate what will happen when rates really rise. In all cases nearly everybody agrees that it will take years before rates rise significantly, if ever again. Rates have been stuck near 0% in Japan since the 1980s after all with no end in sight.

In the UK as well, IFISA capital will become available for bonds investments in November 2016. When IFISA capital opened to P2P lending Crowd2Fund saw a 667% increase in lending capital availability. This confirms my belief that retirement capital is great capital for lenders.

And to finish on a thoughtful note : “When the government is in the business of offering credit, as it is now with student loans, it should think hard about credit risk,” S.P. Kothari, a professor at the MIT Sloan School of Management wrote in The Wall Street Journal with Korok Ray, a professor at the Texas A&M University. “One of the chief lessons of the 2008 financial crisis was that mispricing credit risk can have catastrophic consequences. Yet the government’s Direct Loan Program mostly ignores the credit risk of students, treating them largely as identical in their long-term employment outcomes.” Private lenders are picking up the best student of the crop even amplifying this effect.

Thank you for reading the Lending Times.

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.

Add Comment

Click here to post a comment

Your email address will not be published. Required fields are marked *

Testimonials

default image

"Your daily letter is great!" , Ram , Founder and CEO, PeerIQ

default image

"Hi George - just want to tell you that you are doing a great work with Lending Times;-) Brgds, Kasper" , Kasper, Partner and Co-founder at Dansk Faktura Børs A/S

default image

"I've been following your newsletter for some time now and have been very impressed with the content." Charlie,Co-Founder | Bolstr

default image

"Hey George, I must say I really enjoy your site. It has inspired me to do some changes at our platform and we are the biggest consumer lender in Sweden." , Ludwig, CEO @ Savelend Sweden AB

default image

"Your daily email is very useful. It gives quick update on what's going in the market. Thank you very much for all that info." Yann Murciano, Head of Base Metals Trading at Morgan Stanley

Our daily p2p news digest

Daily News Summary Digest Sent Daily To Your Inbox