Friday August 11 2017, Daily News Digest

small business credit risk

News Comments Today’s main news: Earnest has Barclays looking for a buyer. Kabbage raises $250M. KBRA assigns preliminary Kabbage Asset Securitization ratings for Series 2017-1 Additional Notes. Funding Circle revamps website. Today’s main analysis: Small Business Credit Survey. Today’s thought-provoking articles: How good is POS financing? How the People’s Bank of China is changing online payments. Goldman Sachs on China’s […]

small business credit risk

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News Summary

United States

Kabbage Raises $ 250 Million (NewsCenter), Rated: AAA

Fintech company Kabbage completed $250 million in financing from a subsidiary of SoftBank Group.

According to the company, this investment represents the largest equity raise in the online small business lending segment to date and brings Kabbage’s total equity raised to nearly $500 million.

KBRA Assigns Preliminary Ratings to Kabbage Asset Securitization LLC, Series 2017-1 Additional Notes (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of additional Series 2017-1 notes (the “Series 2017-1 Additional Notes”) issued by Kabbage Asset Securitization LLC.

Kabbage Asset Securitization LLC (the “Issuer”) issued $525 million of Series 2017-1 Class A, Class B, Class C and Class D Notes (collectively, the “Series 2017-1 Notes”) on March 20, 2017. The Series 2017-1 Additional Notes include $25 million of additional Series 2017-1 Class A, Class B, Class C, and Class D Notes (together with the Series 2017-1 Notes, the “Notes”). The ratings for the $525 million of original Series 2017-1 Notes will be confirmed in conjunction with the issuance of the Series 2017-1 Additional Notes. The Series 2017-1 Additional Notes will have the same terms as the corresponding classes of Series 2017-1 Notes, including same Note Rate, Advance Rate and Legal Final Payment Date. The proceeds of the sale of the Series 2017-1 Additional Notes will be used to provide extra funding capacity for Kabbage.

Source: BusinessWire
Source: BusinessWire

Affirm – A Leading Point of Sale Finance Provider (Nanalyze), Rated: AAA

Not surprisingly, there is a lot of easy money to be made in loans. If we look at the CB Insights list of unicorns, we see 211 of these mythical creatures grazing in a field of rainbow colored grass. If we break these unicorns into categories, here are the top-3:

  • eCommerce/Marketplace – 16%
  • Internet Software and Services – 13%
  • Fintech – 12%

When we drill into the fintech category, we see that just over half of the companies are based in the USA (13 fintech companies). Of these 13 fintechs, almost half are enabling people to spend money they don’t have:

  • Social Finance – $20 billion in loans funded (vs. just $1.45 billion in savings)
  • Credit Karma – Helps you see how much money you can borrow
  • Greensky – Instant credit decisions
  • Avant – Personal loans using artificial intelligence (AI) for credit scores
  • Prosper – Loan money to your neighbors so they can buy more isht
  • Kabbage – Loan money to small businesses at ridiculous rates

San Francisco startup Affirm has taken in a whopping $420 million in funding so far from high profile investors like Andreessen Horowitz, Khosla Ventures, Morgan Stanley, and Peter Thiel’s Founders Fund.

The ability for Affirm to be right there at the point of purchase is what puts them in front of everyone else who is trying to finance purchases. When you select Affirm, then you’re required to create an account after which your ability to pay is assessed.

This is not a revolving line of credit, but rather each transaction is evaluated on its own merits. The transactions are reported to Experian so that you can build up your credit to buy even more isht. For the privilege of instant credit at the point of purchase, you’ll pay between 10% and 30% APR simple interest.

San Francisco fintech is shopping for a buyer, as it scrambles to raise $ 50 million (Biz Journals), Rated: AAA

San Francisco fintech Earnest has hired Barclays (NYSE: BCS) to help it find a buyer and raise $50 million in equity, a “dual track” process that could see the company sold for around $200 million, The Information reports.

A sale of the online lender at that price would be lower than previous valuations, which have been pegged higher after the company raised $200 million in debt and $100 million in equity.

SMALL BUSINESS CREDIT SURVEY  (New York Fed), Rated: AAA

Startups are of particular interest since they account for 34% of all small employer firms and play an outsized role in U.S. innovation and productivity. Young firms are the drivers of job growth in the United States, accounting for nearly all net new job creation and almost 20% of gross job creation. Yet, even as their importance has become more widely recognized, the rate of startup creation has been decreasing for years. And, of those ventures that launch, failure rates are high. Approximately one-third of new establishments fail within their first two years, and half fail within five years.

While funding is the lifeblood of every company, capital is especially critical for startups. To reach scale, startups need to be able to secure expansion capital. The Report on Startup Firms offers detailed intelligence on startups’ financing needs and challenges, asking questions about capital requests, borrowing qualifications, applications and success levels.

This report addresses several important borrower-centric questions:

  • How strong is demand for financing among startups?
  • Are startup firms seeking financing and credit from traditional lenders, or are younger firms attracted to new capital sources?
  • How successful are new firms in obtaining financing, and how do they rate their experiences with lenders?
Source: Small Business Credit Survey

Read the full must-read report here.

PayPal Acquires Swift Financial, Expands Loan Capabilities (The Street), Rated: A

PayPal Holdings Inc. ( PYPL) has acquired online lending firm Swift Financial in an effort to expand the online payments company’s business that offers working capital to merchants, Reuters reports.

PayPal will now be able to offer term loans of up to $500,000 to its larger merchants while taking advantage of Swift’s data and capabilities.

Is regulation really keeping banks from lending? (American Banker), Rated: A

Policymakers pushing to scale back regulation have relied heavily on a core argument — bank lending is being held back by post-crisis capital rules and other restrictions.

Federal Reserve Board Chair Janet Yellen has repeatedly said that banks’ lending activities have not been appreciably affected by new rules. In a hearing last month, she pointed to a survey of members by the National Federation of Independent Business which suggested that only a small fraction of small businesses are unable to get the credit they desire.

But loan demand is a difficult thing to measure, in part because it’s hard to count loans that aren’t made. By some metrics, lending demand is down.

But the industry says there is a worrisome trend that those aggregate numbers fail to address, and that is the heightened challenges that banks — particularly larger institutions — face in lending money to borrowers with less than perfect credit scores.

Bill Nelson, chief economist and head of research at The Clearing House Association, said that the new capital and liquidity rules — and especially the Fed’s stress testing program — have made it especially hard for the largest banks to make loans that run a risk of default under economic stress.

Competition rewards student loan borrowers who do their homework (Credible), Rated: A

An analysis of rate requests submitted by students and their families through the Credible marketplace found that when borrowers prequalified with more than one lender:

  • The average difference between the high and low interest rate on 10-year, fixed-rate loans was 1.7 percentage points.
  • Borrowers choosing the loan with the lower interest rate could expect median savings of $2,769.
  • In addition, private student loans funded through the Credible marketplace so far this year carry rates that can be competitive with federal PLUS loans.

When students and families request rates through the Credible marketplace and prequalify with more than one lender, the difference between their high rate and low rate averages 1.1 to 1.7 percentage points, depending on the loan term and type.

 

Vanguard posts unrivaled digital platform AUM (FinancialPlanning), Rated: A

The firm’s hybrid advice offering, Personal Advisor Services, is now at $83 billion in assets under management, according to the firm, putting it in position to be the first digital platform to cross $100 billion.

Since the first quarter of the year, the platform’s assets have experienced a 66% growth increase.

Even during its pilot phase with no paid advertising support, assets for Personal Adviser Services rose from $755 million in 2013 to $10.1 billion at the time of its launch in 2015.

FastPay and Tennenbaum Structure an Innovative $ 80MM Credit Facility for Videology (Newswire), Rated: A

FastPay, a prominent financial technology company that provides lending and payment solutions to digital businesses, along with Tennenbaum Capital Partners, LLC today announced the close of an $80 million international credit facility for Videology. Videology is a leading, global converged TV and video software provider with offices across the United States, Europe, Canada, Asia and Australia.

REAL ESTATE TOPS THE WILLIS ALTERNATIVE INVESTMENT LEAGUE TABLE (All About Alpha), Rated: A

The gist of its new report is that the alternatives asset industry has grown to nearly $6.5 trillion in assets under management.  The world’s largest 100 alternative asset managers make up more than 61% of the pie, with $4 trillion, which represents an increase of 10% in the latter AUM number over the course of 2016.

The survey divided those 100 managers into seven classes, and found that of the ten, the largest share of assets is that held by real estate managers. The full breakdown among the seven classes is as follows:

  1. Real estate – 35% of the whole, over $1.4 trillion;
  2. Private equity fund managers – 18%, and $695 billion;
  3. Hedge funds – 17%, and $675 billion;
  4. PE funds of funds – 12%, and $492 billion;
  5. Illiquid credit – 9% and $228 billion;
  6. Infrastructure – 4% and $161 billion;
  7. Commodities – 1% and $40 billion.

Criticism Heats up on Real Estate Crowdfunding Platform iFunding (Crowdfund Insider), Rated: A

iFunding, a real estate crowdfunding platform, is getting hammered on Bigger Pockets – a real estate investment forum. iFunding has had a choppy operational history at best. The platform has been peppered with high profile partnerships and then departures. Two unrelated lawsuits, in which the platform allegedly prevailed, certainly did not help. iFunding has not been originating any new deals since 2016 – as far as we know. Now there are allegations of deals gone back and the possibility of insolvency.

Largest FinTech Co. in World Accelerates, Invests in Chapel Hill’s WalletFi (Exitevent), Rated: A

Little Rock, Ark., home to the VC FinTech Accelerator, wasn’t quite as sexy a locale, but the 12-week program was sponsored by FIS, the largest FinTech company in the world. It offered funding as well as access to 30 executives from a variety of major banks and FinTech companies who’d signed on as mentors and advisors.

The decision has been a good one. WalletFi has signed on its first customer and two high profile advisors including the CEO of a publicly-traded bank.

Crop Pro Raises $ 8M in Series A (Coverager), Rated: A

Des Moines-based Crop Pro announced it has raised $8 million in a Series A round led by agriculture investors Finistere Ventures and Seed 2 Growth Ventures (S2G), with participation from specialty insurer GuideOne Insurance . Crop Pro will use the investment to expand its team and speed the development of products and services that bridge the gap between agricultural and financial technologies.

3 Possible Application of Machine Learning in finance (TechBullion), Rated: A

It is becoming extremely hard to correctly determine the eligibility of a loan borrower. Even after careful evaluation of all available parameters, some successful companies and individuals still default their bank loan.

Loan eligibility evaluation tasks will be taken over by the smart machine learning technology. To determine the credit score of a client, machine learning can apply regression algorithms which are accurate.

As the financial world transition to digital currencies and digital transactions, there is going to be no physical theft because the money is virtually held. For this reason, thieves are starting to change tact and are now switching to digital means of stealing money.

When put in place, machine learning begins by gathering and segmenting data into at least three segments to create models which eventually amounts to datasets. These datasets can be obtained from historical information. The machine learning models and datasets can then be used to predict the possibility of fraud occurring in financial transactions.

7 Reasons Why Investing in Real Estate Online is Efficient & Effective (Crowdfund Insider), Rated: A

Forbes reported earlier this year that real estate crowdfunding was a $3.5 billion industry in 2016, up from $1 billion in 2014.

  1. Real Estate Investing Is No Longer (as) Local. With online tools and search algorithms, you can put searching for properties ‘on automatic’ and find properties that match your criteria – locally, nationally or even anywhere in the world. 
  2. Transparency. Many online platforms, in addition to doing most of the due diligence before presenting their investment opportunities, have built-in tools that allow investors to analyze risk, assess property valuations, calculate internal rates of return and loan-to-value calculations, and do market research. 
  3. Availability of Information. This availability of information has spurred some investors to create their own investment groups where they pool (i.e. crowdsource) their collective knowledge to evaluate the investments presented, and often will use other resources and means to further evaluate an investment opportunity.
  4. Document Delivery Is More Efficient.
  5. Convenience. Investors in this century no longer have to drive to view properties because images and virtual tours online make it unnecessary. Technology has taken real estate from the ground to the cloud.
  6. Lower Barriers to Entry. Many real estate investing platforms facilitate investments for  $1,000, $5,000 or $10,000. Through online real estate platforms, investing can be done with just a few hundred dollars per month, as many investments are simply equity trades where investors are buying a stake in a project or stakes in multiple projects within a single portfolio. Even debt-based instruments can be entered into with a small fraction of the investment needed 10 or 20 years ago. A few up-and-coming real estate platforms allow non-accredited investors ways to invest for as low as $100 per month.
  7. Greater Diversification. With today’s online options, an investor can diversify into fix-and-flip projects, rental properties, and debt or equity across residential, multifamily and commercial more easily than even 5 years ago.

Want to Be a Real Estate Millionaire? Here’s How to Invest with a Single Click (Inc.), Rated: B

Fortunately for investors of all types, real estate became the perfect asset class for crowdfunding: stable, tangible, and relatively predictable in its growth and eventual returns.

If you’re looking to get started in real estate in a few hours or less, here are a few tips to get you started:

  1. Understand how crowdfunding portals work. There are two classes of investors: accredited and non-accredited.
  2. Ascertain what kind of investor you are. There are two classes of investors: accredited and non-accredited.
  3. Carefully weigh any investment, with the help of an expert. There are two classes of investors: accredited and non-accredited.

Five Hot Atlanta Startups (NewsCenter), Rated: B

Kabbage processes data generated through ordinary business activity, such as accounting data, online sales, shipping and dozens of other sources, to understand performance and deliver fast, flexible funding in real time. Kabbage has raised nearly $500 million in funding, with a whopping $250 million Series F that closed just a few days ago. According to the company, Kabbage has provided in excess of $3 billion in loans to more than 100,000 small businesses across all 50 U.S. states.

According to the company, more than 13,000 customers around the world use PrimeRevenue to optimize their financial supply chain. PrimeRevenue has raised more than $115 million in funding from Battery Ventures, Brown Brothers Harriman, and RRE Ventures.

United Kingdom

Funding Circle Revamp: Online Lender Announces New Look & Feel to Platform (Crowdfund Insider), Rated: AAA

On Thursday, online lender Funding Circle announced it is revamping its platform by offering a new look and feel. The lending portal also announced its new motto, Made to Do More.

Investors Spend £7bn on Alternative Income Trusts (Morningstar), Rated: A

Over the past 12 months to August 2017 investment trusts have raised £9.6 billion from investors in these two ways – known as issuance. Of this, 74% has been within what could broadly be termed alternative income; those assets not directly comparable to equities or conventional bonds and which distribute a structured yield to shareholders.

Issuance in what could be termed conventional income, such as multi-asset or UK and global equity income trusts, totalled £668 million. Finsbury Growth & Income (FGT) led the way with £112 million of issuance. Conventional issuance amounted for around £950 million which was dominated by activity in the secondary market from Scottish Mortgage (SMT) £299 million. Alternative income accounted for the remaining £7.2 billion.

Morrow: stop pandering to banks on robo-advice (Citywire), Rated: A

The regulator should stop pandering towards banks when it develops rules for robo-advice, evestor chief executive Anthony Morrow has argued.

‘If [evestor co-founder] Duncan Cameron and I can build a business to provide financial advice to customers then banks should be able to.

‘The only reason is absolute greed. There is probably an argument to say if, and it is a massive if, interest rates went up three or four percent, would the banks even be bothered because at that sort of rate they would probably still be getting a 2% margin on current accounts which is more than they would make on these new robo-advice things, and with absolutely no risk there,’ he said.

FCA: Advice market reform is ‘on track’ (Money Marketing), Rated: B

In particular, it cited fee transparency and the removal of commissions as steps forward, and that the results of its recent suitability review, which showed that 93 per cent of advice cases were suitable, demonstrated positive results.

The FCA writes: “A market where advisers aren’t driven by commission and are better qualified will provide a better quality of advice for consumers.”

China

This PBoC circular is set to radically change online payments in China (The Asset), Rated: AAA

The new document requires all third-party platforms, such as WeChat Pay, Alipay and others, to connect with Wang’lian (网联), an independent clearing house jointly established by PBoC, other Chinese regulatory bodies and some payments companies.

The new model adopts a centralized clearing procedure where Wang’lian will act as the sole intermediary clearing entity to handle all transactions between payments companies and banks.

According to Chinese media, the document from PBoC requires that banks and payments companies be ready with the internal infrastructure changes required for the new model by October 15. From June 30 2018, all payments and transfers will be processed by Wang’lian.

Data from online transactions, for instance transactions through WeChat’s red packet function, will be monitored by PBoC.

Goldman Sachs: 2017 China ‘s financial technology rise (199IT), Rated: AAA

Click the image to read the report.

The latest monthly report of P2P industry in Chinese first-tier cities: Beijing overtook Shanghai (Xing Ping She), Rated: A

Recently, a third-party institution has launched the Monthly Report of P2P Lending Industry of Chinese First-tier Cities. According to the report, the total number of P2P lending platforms in Chinese first-tier Cities has reached to 1,100 by the end of July, among which 403 platforms are in Beijing, 279 in Shanghai, and 418 in Guangdong Province.

Meanwhile, the total Volume of P2P lending industry in the three areas has reached to $27.37bn, increased by $592m from the last month. The volume of Guangdong Province ranked No.1, which amounts to $9.53bn, with growth rate of 2.01 percent from the last month. The following was Beijing, where the volume amounted to $9.19bn, with the month-on-month growth of 6.69%. And Shanghai reached the p2p industry volume of $8.65bn, which was down 1.95% from the previous month.

China Rapid Finance Limited Sponsored ADR (XRF) to Release Quarterly Earnings on Thursday (Week Herald), Rated: A

China Rapid Finance Limited Sponsored ADR (NYSE:XRF) is scheduled to announce its earnings results before the market opens on Thursday, August 17th. Analysts expect the company to announce earnings of ($0.17) per share for the quarter.

China Rapid Finance Limited Sponsored ADR (NYSE:XRF) last posted its quarterly earnings data on Thursday, May 25th. The company reported ($1.01) earnings per share for the quarter.

European Union

Robo.Cash Update: Investments Jump 30% in July (Crowdfund Insider), Rated: AAA

Robo.Cash, an automated peer to peer lending platform with a buyback guarantee, reports that July was a solid month for the online lender as investments jumped 30%. In the first half of the year, Robo.Cash says that over 700 investors have signed up and 85,720 loans have been originated. In July, 187 investors joined the platform.

Source: Crowdfund Insider

One in five German companies faces charge on bank deposit (New York Daily News), Rated: A

Nearly one in five German companies has faced being charged for parking cash at its bank as a result of the European Central Bank’s negative rate policy, the Ifo economic institute said on Wednesday.

Only 8 percent of all companies eventually accept the charge, with most others escaping it through negotiations or by switching banks, Ifo’s survey of 4,000 companies showed.

International

How Financial Institutions and Fintechs Are Partnering for Inclusion (Center for Financial Inclusion), Rated: AAA

Major Findings

  • The best partnerships between financial institutions and fintechs are a win-win for both partners, as well as for financial inclusion. Mainstream financial institutions partner with fintechs to improve product offerings, increase efficiency, and lower costs – goals with special relevance to low-income customers. By partnering with mainstream financial institutions, fintechs get to scale their technology and can access capital to grow. As a result of these partnerships, low-income customers who are left out of – or poorly served by – the financial sector have greater access to higher quality, more convenient, and less expensive financial products and services.
  • To facilitate productive fintech partnerships, mainstream financial institutions are organizing internally for innovation, strategically integrating systems and staff, and developing contractual agreements to ensure stability and success. Fintech partnerships enable legacy institutions to engage with and learn from new technology in low-risk, low-cost ways. They are also key to allowing incumbents to compete in a world where alternative players, like Facebook and Amazon, are threatening the central role of financial institutions in the lives of customers. By offering better, less expensive, and more innovative products, financial institutions can assert their continued relevance as customer-facing institution.
  • One encouraging and somewhat unexpected finding is that the partnerships between financial institutions and fintechs represent a slow but pervasive financial industry shift toward customer-centricity. Better data management and use, new digital banking products, and greater customer engagement all enable better service for underserved customer segments.

Read the full report.

Crypto vs VISA – Can Denarius Compete When it Comes to Transactions Per Second? (The Merkle), Rated: A

VISA handles on average around 2,000 transactions per second (tps) and peaks around 4,000 tps during high shopping periods. This is just a fraction of their capacity, which is said to be around 56,000 transactions per second.

Paypal, in contrast, handled around 10 millions transactions per day or 115 transactions per second according to data from late 2014.

Today, the Bitcoin network is restricted to a sustain rate of around 7 transactions per second or a little over 600,000 transactions per day.

REAL Launches ICO to Disrupt Global Real Estate Investment Markets (Cryptocoins News), Rated: A

REAL will disrupt global real estate investing by moving it on to the Ethereum blockchain and enabling the average investor to build a real estate portfolio.

Property owners and developers will apply to have their assets tokenized and listed on the REAL crowdfunding website. The REAL team – which is composed of successful entrepreneurs, venture capitalists, and developers who have already invested $350,000 of their own funds in the project – will carefully analyze the properties to select the ones that will provide investors with the greatest long-term value, with targeted annual returns of 12-20%.

The REAL token sale will begin on August 31, but investors contributing greater than 100 ETH will have the opportunity to participate in a 24-hour pre-sale on August 24. During the ICO, investors will be able to acquire tokens at the rate of 220 REAL per 1 ETH until the investment cap has been reached.

Australia

DirectMoney closes funding deal (LendIt), Rated: AAA

The Board of DirectMoney Limited (ASX: DM1), (“DirectMoney”, or the “Company”) are delighted to announce the completion of a wholesale funding agreement with 255 Finance.

The agreement is structured around the purchase of $50 million in DirectMoney originated loan assets, with the intent to increase this in the future. 255 Finance will also receive equity in DirectMoney and options that vest based upon specific hurdles being met. Significant growth in both lending volumes and the operational performance of DirectMoney is anticipated as a result of the facility.

Asia

What’s slowing the adoption of straight through processing for payments? (The Asset), Rated: A

One technical difficulty is the need for compatible payments systems across different entities. The ISO 20022 XML format is a standardized and popular format for payments among financial institutions. However, payments under the XML standard still need to be reformatted if the transaction goes through the United States’ Automated Clearing House network.

Regulatory requirements, which can include know-your-client checks and anti-money laundering, as well as risk and control, can mandate that a part of the process is completed manually.

Authors:

George Popescu
Allen Taylor

Thursday September 15th 2016, Daily News Digest

Thursday September 15th 2016, Daily News Digest

News Comments Today’s main news: FastPay raises $15mil in equity; MoneyLion closes financing line with Macquarie,; 2 fintechs, Financeit and Concentra, purchase TD Bank’s (a bank’s !) home improvement financing assets. Today’s main analysis: LendKey releases student loan cohort default data, strange data. Today’s main thought provokers:  The future of Finance; UBS wealth manager tries AI; […]

Thursday September 15th 2016, Daily News Digest

News Comments

United States

United Kingdom

Canada

China

 

United States

The future of finance: Banking as a platform, (The Next Web), Rated: AAA

A new law is going into effect in 2018 called the Revised Payment Services Directive in Europe, or PSD2 for short.

This law and the possibilities new technologies bring, means the role of banking is changing and emphasizes the trend towards ‘open banking’. Financial services and banks such as Dutch bank ABN AMRO see new technologies on the horizon and are working to find the trends in which they can gravitate toward and adapt to.

PSD2 works to provide a foundation for the creation of a single-wide market for payments. It allows consumers the ability to connect their bank accounts with third party services, allowing the services through an API to access data generated by their bank accounts.

In other words, with PSD2, banks will essentially become a platform for banking with providing APIs to access data.

Entrepreneurs can use the new law of PSD2 to drive innovation and creation of new services to offer to customers, and can now use bank APIs to do it. For example, an entrepreneur can create a way for one customer to have a central dashboard that has all of their financial data in one place, regardless of the bank or how many different financial institutions they do business with.

For instance, ABN AMRO works closely together with startups and scale-ups to bring customers simple and user-friendly apps. Recently, the financial institution worked with Swedish startup Tink to develop a new app allowing customers to easily overview their earnings and expenditures.

 Acquire Real Estate Creates Liquidity for Investors in Commercial Real Estate, Facilitates First Fully Automated Secondary Market Exchange, (Email), Rated: AAA

Acquire Real Estate, a commercial real estate crowdfunding platform, has completed its first fully automated secondary market exchange between two of its real estate investors.

The investors relied on Acquire’s patent pending Investor Exchange,which facilitates a blind auction process that enables a seller to identify a buyer, establish a value and generate the required documentation and consents. The investors exchanged an interest in the DoubleTree by Hilton Dallas-Fort Worth, a 282-room, 8-story hotel located adjacent to the Dallas-Fort Worth Airport.

“We built the Investor Exchange with our investors’ need for liquidity in mind,” said Gerry Polucci, Co-Founder and CTO of Acquire Real Estate. “We also built the technology with an understanding that it had to be simple and modernize the process.”

Acquire’s technology allows the exchange process to unfold quickly without the inconveniences usually associated with such transfers. Investors can use the exchange to post all or part of an Acquire investment for exchange with any other member of the Acquire community. The seller then specifies the terms of the auction and provides up-to-date information concerning the investment. Acquire investors can then bid on the opportunity based on the terms proposed. If successful, the transaction takes place for an undisclosed amount, which could be higher or lower than the initial acquisition price.

LendKey Introduces Bellwether Report On Private Student Loans, (PR Newswire), Rated: A

LendKey, today released an inaugural industry-specific report entitled Positive Signal for Private Student Loans. This is the first in a series that aims to share summarized risk and other unique insights within data from LendKey’s 275 bank and credit union client-lenders nationwide.

To access the full report, please visit: 

Highlights of the report include:

  • Originations and portfolio balance
  • Performance of the LendKey client-lender portfolio over time
  • Cosigner statistics and geographical spread such as 90% of loans are originated with a cosigner and most are from northern states
  • Over the last seven years, defaults and charge-off rates have significantly declined
  • Statistics and growth in serial borrowing

Lenders and asset managers are partnering with LendKey to bring borrowers a powerful, white-labeled lending platform that has redefined Lending-as-a-Service—and gives financial institutions of all sizes the ability to attract new business, grow relationships, manage liquidity, and mitigate risk.

LendKey’s Key results from the report above, (See above), Rated: AAA

Improvement in default performance:

 

FastPay Secures $ 15 M in Funding, (Business Wire), Rated: A

FastPay is the market-leading provider of liquidity and financial workflow solutions to the global digital media industry. Through its proprietary technology platform, IGNITE, FastPay can dynamically assess the credit of digital media businesses and deploy payment workflow solutions for media businesses globally.

FastPay, has raised $15 million from Oak HC/FT to support FastPay’s continued growth, development of proprietary technology and acquisition of strategic new hires. The investment is the first FinTech investment from Oak HC/FT’s recently launched $500 million growth-equity fund.

Mobile Finance Platform MoneyLion Closes Portfolio Financing Line with Macquarie Group, (Email), Rated: A

Moneylion, to date, has access to $650m of debt capital from Macquarie and other institutional lenders.

To date, MoneyLion has originated over 120,000 loans from its balance sheet.  Through its website and mobile app, available on Apple and Android devices, MoneyLion offers personal finance tools and a suite of credit products designed to foster better, more informed financial decision-making across the lifetime of its growing community of users.

Orrick Launches Legal Portal for Direct Lending, (Fin Alternatives), Rated: A

Global law firm Orrick has jumped into the rapidly-growing world of private credit with the creation of what it describes as the first legal portal for the corporate direct lending community.

The site breaks new ground by offering fast, simple solutions to a wide variety of common issues that arise in direct lending transactions, Orrick said in a statement.

Lending Club will Pay New CFO Signing Bonus & $ 4.5 M Stock Grant, (Crowdfund Insider), Rated: A

According to an 8-K filed with the SEC, Lending Club will pay Thomas Casey, their newly appointed CFO, a base salary of $425,000 with a 75% bonus target plus $4.5 million in an initial equity award to vest quarterly over the next four years. On top of this, Casey will also receive a one-time signing bonus of $600,000. Casey will receive half of this bonus immediately and the other half a year from his start date (later this month).

Simultaneously, Lending Club announced the creation of a Rabbi Trust – a non-qualified retirement vehicle to help compensate senior executives.

Why Lending Club Isn’t Worth Your Money…, (Seeking Alpha), Rated: A

Earnings expectations are now expected to be negative this year and Wall Street is looking for only $0.07 in earnings per share in 2017. At this stage in its life cycle and growth, one could argue a P/E is irrelevant. Even if there were not questions about Lending Club’s future growth, we would feel uncomfortable owning this company at a P/E approaching 80x.

Looking at Enterprise Value to EBITDA, we also are not attracted to a business at roughly 60x 2017 expectations. The problems of 2016 wipe out more than a full year of growth for this early-stage business, but they also highlight a going concern issue. With its large debt balance and lingering interest costs, Lending Club needs to generate significant cash flow just to stay afloat.

Earnings can be manipulated, so we tend to focus our attention on cash flow. The cash flow statement rarely lies. Before the surprising revelations in May, Lending Club averaged nearly $50 million of cash flow from operations for three quarters straight.

Cash flow went negative last quarter and will likely stay this way for a few quarters. Will investors look to purchase Lending Club loans? Will Lending Club only draw the most risky borrowers to its platform? These are troubling questions we struggle with.

At the 2002 Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) annual meeting, the legendary duo of Warren Buffett and Charlie Munger had some wonderful comments regarding investing in financials. After Munger discussed how he is often uncomfortable around most financial institutions’ lack of transparency, Buffett had this great financial quote:

“There is so much about a financial institution that you don’t know just by looking at the figures that if anything bothers you a little bit, we’re never sure whether it’s an iceberg situation”.

UBS trials artificial intelligence wealth managers, (V3), Rated: A

Wealth management firm and investment bank UBS is running artificial intelligence(AI) trials with some of its richest clients. AI applications being tested include tools designed to read facial expressions and uncover clients’ unconscious biases towards or against certain types of investment.

The aim is to help the company’s cash-rich, but time-poor, clientele to ask the right questions about their decisions, according to UBS.

RBS announced earlier this year  that the bank may replace hundreds of face-to-face customer service staff with automated services, which it claimed will free its remaining human agents to be expert advisers.

Fraud detection is another area ripe for AI applications, and companies such as Ravelin have deployed machine learning capabilities to identify online payment fraud and other pattern-based behaviour.

IBM and Aldebaran Robotics (now majority owned by Japan’s SoftBank) have been testing a robotic concierge service using IBM’s Watson service in the cloud via industry-specific datasets provided by ‘cognitive travel agent’ WayBlazer.

UK government-backed startup PingGo announced last week that its mission is to automate PR, giving rise to the real possibility that press releases may soon be produced by robots for other robots to read and disseminate as machine-readable news.

Dr Anders Sandberg, James Martin Research Fellow at Oxford University’s Future of Humanity Institute, observed earlier this year that if you can describe your job it can and will be automated.

United Kingdom

Funding Circle SME Income Fund Ltd (FCIF) to Issue Dividend Increase – GBX 1.63 Per Share, (BBNS), Rated: A

Funding Circle SME Income Fund Ltd (LON:FCIF) declared a dividend on Wednesday, September 14th. Investors of record on Thursday, September 29th will be paid a dividend of GBX 1.63 ($0.02) per share on Monday, October 31st. This represents a yield of 1.59%. The ex-dividend date is Thursday, September 29th. This is a boost from Funding Circle SME Income Fund’s previous dividend of $1.00. The official announcement can be seen at this link.

Separately, Jefferies Group started coverage on shares of Funding Circle SME Income Fund in a report on Wednesday. They issued a “hold” rating for the company.

Funding Circle SME Income Fund Limited is a United Kingdom-based closed-ended fund. The Fund’s investment objective is to provide shareholders with a level of dividend income, primarily by way of investment in credit assets, both directly through the marketplaces and indirectly. The Fund holds credit assets through maturity.

Bank of England sticks with rate cut signal despite Brexit bounce, (Reuters), Rated: AAA

The Bank of England said on Thursday it was still likely to cut interest rates to just above zero later this year, even though the initial Brexit hit to Britain’s economy was proving less severe than it expected only last month.

The Bank’s nine rate-setters voted unanimously to keep Bank Rate at its new record low of 0.25 percent, the lowest level in the BoE’s 322-year history.

They also voted 9-0 to keep the Bank’s bond-buying program target at 435 billion pounds and to continue with its new plan to buy up to 10 billion pounds’ worth of corporate bonds.

A Reuters poll of economists showed on Thursday that Britain is likely to narrowly avoid a recession.

Property Development Academy: LendInvest to Help Small Developers Build More Homes, (Crowdfund Insider), Rated: AAA

LendInvest, an online mortgage marketplace that has facilitated over £740 million in financing, has launched the “first” Property Development Academy in an attempt to boost construction of new homes.

The UK government estimates the need for additional housing in England at between 232,000 to 300,000 new units per year, a level not reached since  the late 1970s and two to three times current supply.

According to LendInvest, the Property Development Academy will be a two-day intensive programme that takes 20-25 individuals through hands-on, practical modules covering the full development project: from land valuation and acquisition, through to planning permission, supplier contracts, cost management and final sale. Sessions are led by experienced advisers. On top of education, the network of relevant contacts from their local area may become a vital resource for these aspiring developers to call upon in the future.

Canada

Financeit and Concentra acquire TD Bank Group’s indirect home improvement financing assets, (Email), Rated: A

Financeit, a cloud-based point-of-sale financing platform, and Concentra, a leading wholesale finance and trust solutions provider for Canada’s credit unions, today announced the acquisition of TD Bank Group’s indirect home improvement financing assets, with a book value of approximately $339 million.

As part of the agreement, approximately 45,000 TD loans were purchased by Concentra and over 800 merchant dealers were assigned to Financeit.

Financeit has a nationwide footprint in the home improvement industry and has increased its lending activity in this market by almost 200% since last year.

With the transaction now completed, current TD merchant partners can begin submitting loans on Financeit’s platform immediately and can take advantage of the company’s unique approach. This includes mobile-enabled technology, customer self-serve application options, paperless document signing, extended credit and 180-day approval windows. Loan origination on the TD platform will end in October 2016.

Since launching in 2011, Financeit has worked with over 6,000 home improvement, vehicle and retail businesses to process more than $1.5 billion in loans in Canada and the United States. Financeit is a private company and has raised money from a variety of investors, including a division of Goldman Sachs and FIS Global.

Concentra is a provider of national wholesale banking and trust solutions to credit unions across Canada. Concentra is serving over 80 percent of Canada’s credit unions. The company has over $37 billion in assets under administration, including over $8 billion in consolidated assets

China

Shanghai P2P Lender Raided After Failing to Make Payments, (CaixinOnline), Rated: A

Police raided the Shanghai offices of a major peer-to-peer (P2P) lending platform operator on Tuesday and arrested five people on suspicion of illegal fundraising, nearly half a year after the company stopped paying returns to its investors.

Police said they will urge the company to meet its financial obligations, but didn’t say whether criminal charges will be filed.

Kuailu is a typical case, promising investors 10 percent annualized returns, far higher than they could get from traditional banking products. Founded in 2003, the company entered P2P lending in 2014. It found a niche in lending for film production in both China and Hollywood using connections of its then-chairman, Shi Jianxiang.

In the past two years alone, Kuailu raised about 14 billion yuan ($2.1 billion) from about 260,000 investors, and poured the money into such high-profile projects as the Hollywood film The Bombing starring Bruce Willis.

But the company ran into financial difficulties and stopped paying out returns about six months ago, around the same time that Shi resigned, citing health concerns.

In June, Kuailu promised at least 600 investors, most of them elderly and in urgent need of cash, that they would receive priority in getting back 5 to 20 percent of their principal, a pledge requiring up to 100 million yuan, according to a notice on its official account on the popular WeChat mobile instant messaging platform.

Author:

George Popescu