Wednesday January 31 2018, Daily News Digest

United States

Spreads narrow on SoFi’s 1st consumer loan ABS of 2018 (Asset Securitization Report), Rated: AAA

Strong demand and higher credit enhancement allowed Social Finance to offer lower spreads on its first consumer loan securitization of the year, even after upsizing the deal to $850 million from $650 million originally.

Four tranches of rated were issued, resulting in an advance rate of 91%, according to a person familiar with the transaction. The amount of overcollateralization in the deal will gradually build from 9% to 16%.

Two senior tranches of notes rated AA + by KBRA were issued. The Class A-1 tranche, which has a shorter expected life, pays 50 basis points over the Eurodollar synthetic forward curve, in from 57 basis points on the comparable tranche of the previous transaction. The Class A-2 tranche pays 75 basis points over the interpolated swaps curve, in from 90 basis points on the previous deal.

 

Ranger Direct hit by arbitration delay and manager uncertainty (Citywire), Rated: AAA

The New Year rally in Ranger Direct Lending (RDL) shares has come to an abrupt halt after the listed loan fund, which is backed by fund manager Mark Barnett, said arbitration to settle the legal dispute between it and Princeton Alternative Finance had been extended by around two months.

The £119 million investment trust has been locked in an argument with Princeton, a New Jersey-based investment fund in which it is the leading investor, over its exposure to Argon Credit, a US peer-to-peer lending platform that collapsed in December 2016.

Uncertainty over the exposure to Argon – which represents 14% of its £217 million net assets – and doubts over the due diligence by its adviser Ranger Alternative Management (RAM) have hobbled the shares. They fell over 23% last year but had rallied since the end of December when they hit a record low discount of 32% below net asset value. From 704p at the start of the year they recovered to 767p last week but have dropped 4% or 31p today after yesterday’s announcement. Although still wide, the discount has narrowed to just under 13%.

Relx pays £580m for digital identity company (Financial Times), Rated: A

Relx, the UK-listed information and analytics group formerly known as Reed Elsevier, has struck its biggest deal in a decade with the £580m purchase of ThreatMetrix, an online identify verification business.

ThreatMetrix has one of “largest repositories of online digital identities”, according to UBS analysts, and has built a database containing 1.4bn unique online digital identities from 4.5bn devices in 185 countries.

GLI Finance scores £50m funding line from HoneyComb fund (AltFi), Rated: A

The funding line has a term of 3 years and comprises a £50m revolving credit facility, of which £20m will be drawn and deployed immediately.

Ezbob Raises £15M in Expansion Capital (Finsmes), Rated: A

Ezbob, a London, UK-based E-lending company, raised £15M in funding.

Da Vinci Capital Management Ltd. reportedly made the investment at a post money valuation of £100m.

Meet The Lenders That Need Your SME’s Money More Than You Need Theirs (Forbes), Rated: A

in particular, the UK’s peer-to-peer lending platforms are now crying out for new customers.

Today, however, more than 30 lending platforms, including all the large small business lenders, offer their own IFISA or are on the verge of launching a product. For investors, moreover, the returns available from these schemes looks very attractive: annual yields of 10 per cent or more in some cases look phenomenal when set against the backdrop of bank and building society accounts typically paying less than 0.5 per cent a year, even if there is a risk of losses on IFISAs if borrowers default.

Augmentum Capital to seek public listing to back fintech start-ups (Financial Times), Rated: B

Augmentum Capital, the venture group backed by Lord Rothschild, is planning to list a financial technology investment fund in what would be one of the sector’s biggest initial public offerings in a decade.

It is understood to be applying for admission to London’s main market in March and will seek to raise up to £125m with the sale of new shares.

China

China’s financial risk worse than in US before financial crisis, says former finance minister (Today Online), Rated: AAA

The level of risk facing China’s financial system could be higher than was seen in the United States before the global crash, according to a former Chinese finance minister.

“China’s ratio of M2 [a broad measure of money supply] to gross domestic product has surpassed 200 per cent, which is more than twice that of the United States, yet the average Shanghai interbank offered rate is 4.09 per cent, far higher than the 1.1 per cent in the US.”

According to official figures, the M2 money supply at the end of December was 167.68 trillion yuan (S$34.75 trillion), or 203 per cent of China’s nominal GDP in 2017.

Chinese P2P lending platform Senmiao Technology sets terms for $ 14 million US IPO (NASDAQ), Rated: A

Senmiao Technology, an early-stage Chinese marketplace for peer-to-peer lending, announced terms for its IPO on Tuesday.

The Chengdu, China-based company plans to raise $14 million by offering 3.3 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Senmiao Technology would command a market value of $109 million.

European Union

Klarna signs Maplin for online pay-later (Finextra), Rated: AAA

Today, leading payments provider Klarna has announced a partnership with Maplin – the UK’s number one specialist technology retailer. Maplin customers will now be able to use Klarna’s Pay later and Slice It services, allowing them to order online and receive the very latest Smart Home tech, security/CCTV products, top quality drones and so on, and then pay for them either at a later date or spread the cost over time.

Pay later enables online and mobile Maplin customers making purchases of £200 or less to receive their products and pay for them 30 days later, with no interest or fees.

BNI Europa to fund German SME loans via Funding Circle (Finextra), Rated: AAA

The Portuguese online bank Banco BNI Europa and Funding Circle have entered into a strategic partnership to support the growth of small and medium-sized businesses in Germany.

International

 

CHECQIT, the P2P Lending Platform Aiming to Empower the Unbanked (The Merkle), Rated: A

According to the World Bank’s Global Findex report, nearly 2 billion adults and 160 million small businesses from all over the world do not have bank accounts. Efforts to approach them to traditional financial institutions have not been enough, limiting their economic growth potential.

Only 14% of adults living in the Middle East hold a bank account, opposed to the 94% of citizens from first world western countries that do. Developing regions with underserved communities such as India and sub-Saharan Africa comprise, when combined, nearly 32% of the world’s unbanked and underbanked population.

As a response to this issue, Nassim Benzekri and his team developed CHECQIT, an Ethereum-based, decentralized, peer-to-peer lending platform that allows users to grow their collaterals against a fast-guaranteed loan.

Finastra acquires Olfa Soft SA (Realwire), Rated: B

Finastra has acquired Olfa Soft SA and its cutting edge FX e-trading platform for banks and financial institutions. The move enables Finastra to deliver a unique end-to-end real-time eFX trading solution for banks’ treasury departments, covering distribution, position-keeping, post-trade and payments.

India

Western Union Opens Tech Center In India (Bank Innovation), Rated: AAA

Cross-border payments company Western Union is opening a technology center in India, which will focus on biometrics, machine learning, and robotics, the company announced yesterday.

The center, located in Pune, Maharashtra, will have over 1,000 employees all focused on building these “innovative digital and retail customer experiences globally,” the company said in a press release.

Rubique announces strategic partnership with Optacredit (Outlook), Rated: AAA

Rubique, a marketplace lending platform for individuals and SMBs, entered into a strategic partnership with OptaCredit, an Artificial Intelligence-powered, data-driven online lending platform focused on providing unsecured credit to salaried professionals across India.

With its Online PLUS technology led model and proprietary matchmaking algorithm, Rubique will enlist the company on its online marketplace for applicants to avail viable loan products from OptaCredit’s offerings.

P2P Lending Set to Explode in 2018 (PR Newswire), Rated: AAA

RBI’s much awaited official guidelines for Peer to Peer (P2P) lending platforms to bring them into the ambit of non-banking financial companies (NBFCs) is set to boost online lending. It is fast emerging as an investment option for retail lenders. The NBFC-P2Ps will act as an intermediary to provide an online platform to lenders and borrowers to transact on mutually agreeable terms. RBI has defined P2P lending as a form of crowdfunding that entails issuing unsecured loans to borrowers via an online portal in its 2016, ‘Consultation Paper on Peer to Peer Lending’. However, P2P lending is different from other crowdfunding activities in being a purely debt product, in which multiple lenders fund borrowers as personal loans or small business loans. Most of the P2P platforms in India such as IndiaMoneyMart curate their borrowers after conducting KYC checks, credit assessment, and due diligence before listing them on their loan exchanges.

On the positives, the regulation has made P2P lending platforms accountable to furnish credit repayment/non-repayment information to all 4 credit bureaus, thereby increasing transparency in the credit rating system. The credit rating agencies have records on about 150 million population but P2P lending platforms are also going to bring customers hitherto relying on private money lenders. This presents a huge opportunity to close the credit information gap. It will also reward sub-prime borrowers with a better credit score for showing improvement in loan repayment behaviour.

As many first time or retail borrowers take loans from money lenders or payday companies which charge interest as high as 5% to 20% per month, P2P platforms like IndiaMoneyMart are bridging the gap by making credit not only accessible but affordable. Bangalore-based IT consultant, Tanmay Thorat* (name changed) was paying over 300% interest to payday loan companies and approached IndiaMoneyMart for a small ticket size loan of INR 1 Lakh secured at rate of 13% annualized interest in March 2016required to settle his credit card debt and pay rent deposit.

The expectation from the Union Budget 2018 is immense in the BFSI segment, especially after RBI regulation. Experts hope that essential financial services will have GST rates revised from 18% to 5% or nil.

Budget 2018: how can we enhance the growth of startups in India? (YourStory), Rated: A

Most importantly, the fund of funds for startups (FFS) has begun to take shape with as much as Rs 1,100 crore being disbursed to SIDBI for allocation to venture funds. As of September 15, 2017, 17 venture funds have raised Rs 605 crore from SIDBI and as many as 72 startups have received about Rs 318 crore funds. The Department of Industrial Policy and Promotion (DIPP) has also recently announced that this number will be increased to Rs 2,400 crore by the end of the next fiscal.

For instance, the startup space has reportedly seen a decline of 53 percent in seed funding and 25 percent in venture funds in 2017.

Listed below are four suggestions for Budget 2018.

1. Abolish angel tax
2. Encourage Indians to fund India
3. Extend tax holiday
4. Standardise and simplify   

10 things FM Arun Jaitley can do to boost access to capital via digital lenders (Financial Express), Rated: A

1. Allow a lower MHP for servicing short-term needs of MSMEs
2. Raise rate caps under MUDRA scheme: The RBI currently has capped the final rate that can be charged above the refinance rate offered by MUDRA at 3% for banks, 6% for NBFCs and 10%-12% for MFIs, depending on portfolio size. Since most of the new lenders incur high opex, this cap should be increased in the Budget 2018 to 10-12% in line with MFIs, for loans up to Rs 5 lakhs, and 8-10% for loans from Rs 5-25 lakh value.
3. Extend the SIDBI net
4. Make P2P platforms more attractive: A cap of 5% of net worth for lenders and a maximum individual loan amount of Rs 25 lakh for the borrowers would make these platforms attractive for both lender and borrower.
5. Expand access to MSMEs
6. Introduce PSU Banks turndown program
7. Raise eKYC-based lending limit: The cap for lending through OTP based eKYC should be increased from Rs 60,000 to Rs 5 lakh.
8. Promote eSign
9. Mandate eMandate
10. Increase the flow of data for lending

APAC

Lancers raises $ 9.2m venture round (Deal Street Asia), Rated: AAA

Tokyo-based Lancers, which operates a crowdsourcing platform under the same name, has closed a JPY 1 billion ($9.2 million) round from Tokyo-listed enterprises Persol Holdings and Shinsei Bank.

The investment sees Lancers concluding business partnership contracts with both companies concurrently and will also see it commence its new financing business targeting freelance workers, which the company claims comprise 17 per cent, or 11.22 million workers of Japan’s entire working population.

The addition of Shinsei Bank as an investor will see Lancers, Persol and Shinsei collaborate to develop and provide a new loan service to individual workers who need equipment investment or education/training upon starting a new business.

Crowd Realty closes $ 5.2m Series A (Deal Street Asia), Rated: A

Tokyo-based property crowdfunding portal Crowd Realty has closed its Series A round at JPY 580 million ($5.2 million) from Tokyo-listed Mitsubishi Estate, Shinsei Corporate Investment, Shinsei Bank, and Mizuho Capital, based on an account from The Bridge.

The Series A round saw two tranches: a follow-on investment of JPY 230 million subsequent to a JPY 350 million investment from Mitsubishi Tokyo UFJ Bank, Mitsubishi UFJ Capital, and Kabu.com Securities.

SSC warns against investing in cryptocurrencies (Viet Nam News), Rated: B

In a notice issued on its website on Monday, SSC said that the market now had companies operating in fintech, including cryptocurrency, initial coin offering, crowdfunding, peer-to-peer lending and blockchain. These were new products that had not been regulated, SSC said, thus posing high risks.

 

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