Friday April 13 2018, Daily News Digest

Friday April 13 2018, Daily News Digest

News Comments Today’s main news: Kabbage to acquire Orchard Platform. Zopa to raise 50M GBP. RateSetter investors wait to file taxes. Shanlin Finance being investigated. Kaleidofin raises $2.8M. Today’s main analysis: Hedge funds depend on public information. Today’s thought-provoking articles: Online lenders adopt the model they disrupted. How Plaid became the happy plumbers. How hedge funds depend on public information. United […]

Friday April 13 2018, Daily News Digest

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United States

Kabbage to Acquire Startup Backed by Wall Street Titans (Bloomberg) Rated: AAA

Orchard Platform Markets LLC, a provider of lending data and services backed by the former heads of Citigroup Inc. and Morgan Stanley, is set to be acquired by small-business lending platform Kabbage Inc., said people familiar with the deal.

Kabbage plans to use Orchard’s technology, and some of the employees are also expected to move to Kabbage’s New York office, said the people, who asked not to be identified because the plans are private. It’s unclear how much Kabbage will pay, and the transaction could still fall through. Kabbage and Orchard declined to comment.

FUNDS USE PUBLIC INFO TO COMPLEMENT PRIVATE SIGNALS (All About Alpha) Rated: AAA

Alan D. Crane and two colleagues have written a paper on whether and how hedge funds profit from publicly available information, in particular from SEC filings.

To choose the most likely among the other three, the Rice authors looked at so-called “scrapers,” that is, funds whose essentially strategy is the systematic scraping of the SEC website. Scrapers perform best when filings are long and complex. A long and complicated filing will likely contain important information in the details – information that only a scraper is likely to find.

Source: Do Hedge Funds Profit from Public Information?

Read the full report here.

See where Cincinnati ranks for fraud alerts (Cincinnati Business Courier) Rated: A

The bad news is Cincinnati made the list of 50 U.S. cities, according to Charlotte, N.C.-based LendingTree. The good news is the Queen City finished near the bottom of the list, tied for 45th place with Kansas City, Mo.

See where Denver ranks for fraud alerts (Denver Business Journal) Rated: A

The bad news is that Denver made the list of 50 U.S. cities, according to Charlotte, N.C.-based LendingTree. Among LendingTree users in Denver, 6.2 percent have fraud alerts on their credit reports.

Online lenders adopt the model they sought to disrupt (American Banker) Rated: AAA

This week, at the online lenders’ largest annual conference, much of the talk was about building something closer to a full-service bank, albeit one designed for the digital age.

“If the only thing you’re doing is lending money online, it’s going to go the way of the dinosaur,” said Rob Frohwein, the CEO of Kabbage, which started in loans but has added more products for its small-business customers. “Our objective is to sit at the financial nerve center of small businesses.”

Source: American Banker

MoneyLion, a New York-based online lender that focuses on consumers who lack a financial safety net, announced plans to start offering deposit accounts.

Payday Lenders Sue the CFPB Over Consumer Protection Rule (LendEDU) Rated: A

Community Financial Services Association of America (CFSA), the main trade association for payday lenders, filed the lawsuit on April 9 in the U.S. District Court for the Western District of Texas, according to The Washington Post.

At issue is a CFPB rule, effective in August 2019, that could alter the way payday lenders do business. Lenders will be required to verify if borrowers can afford their requested debt prior to receiving money, and the number of times borrowers can take out consecutive loans will be capped.

How Plaid Became Fintech’s Happy Plumbers — And Built A Business Approaching $ 1 Billion (Forbes) Rated: AAA

Plaid software acts as a kind of plumbing, connecting apps to each new user’s bank to quickly confirm an account holder, without any penny deposits or paperwork.

PLAID HOOKS INTO around 10,000 banks. Its internal fortunes have improved, with $59 million in funding from investors such as Spark Capital, NEA and the venture arms of Citi and American Express. In 2016, its $44 million Goldman-led Series B valued the company at $250 million. Today, with sales quadrupled, the company has recently received funding interest valuing the company at $1 billion, according to a source with knowledge of its finances.

Look under the hood at startups like Acorns, Betterment, Coinbase and Clarity Money, and you’ll find Plaid humming away. Developers love Plaid’s fast tech; founders and their investors like saving money by not having to build their own connections. “We built this for ourselves,” Hockey says, “solving problems that were incredibly hard to do.”

Plaid’s own public status page reveals connections to banks with uptime of 98% or even 95%—meaning that 5 out of every 100 authentications with that bank will fail in that moment, a rate that would be unacceptable were it not for the difficulties imposed by the banks.

Fly now, pay later: Are travel loans a good deal? (WTOP) Rated: A

Travel lenders say they appeal to people with average credit scores who may not qualify for travel reward cards that require excellent credit. The loans also can make sense for people who are building credit and prefer the discipline of fixed payments over credit cards’ revolving payments.

White Oak Partners with C2FO on New Venture (Nasdaq GlobeNewswire) Rated: B

White Oak Global Advisors, LLC on behalf of its institutional clients (collectively “White Oak” or the “Company”), announced today that it has partnered with C2FO, the world’s largest market for working capital, to offer new and innovative receivable financing options to C2FO’s extensive network of businesses throughout the U.S.

With the White Oak partnership, C2FO can provide businesses access to additional funding options when early payment is not available from out-of-network customers.

Premium Title Expands National Footprint by Securing Escrow Licensing in Four New States (Altisource) Rated: B

Premium Title, a national provider of title and escrow services, today announced it has secured escrow licensing in Idaho, New Mexico, Oregon and Washington. This additional licensing expands the business’ footprint and allows Premium Title to now provide clients with direct title/settlement services in 45 states plus Washington, D.C.

 

United Kingdom

Zopa is Raising £50 Million, Shuffles Board as it Preps for Bank Launch (Crowdfund Insider) Rated: AAA

The grande dame of peer to peer lending in the UK, Zopa, is raising £50 million at a valuation of £400 million, according to several reports.  SkyNews states this most recent funding round will be led by current investors including Wadhawan Global Capital out of India. The report does not preclude new money joining the round.  Zopa raised £32 million last summer to help fuel its transition into the next generation digital bank. A forthcoming initial public offering is said to be in the queue as well.

The company also revealed a restructuring of boards. The bank and the online lending vertical will now have separate boards to help guide strategy.

Christine Farnish, the founding Chairperson of the UK P2PFA, will become the Chair of Zopa’s peer to peer lending board. Farnish is widely respected within the global P2P industry as well as with public officials and thus represents a significant addition to Zopa’s leadership.

On the banking side, former Standard Chartered executive Richard Goulding, Paul Cutter of  Paddy Power Betfair and former Tandem CEO Peter Herbert will be joining the board. Herbert will reportedly become Zopa Bank board chair.

RateSetter investors facing wait to file tax returns early (Peer2Peer Finance News) Rated: AAA

RATESETTER investors looking to file their tax return early have been stifled by the platform removing its tax statement functionality for enhancements.

The deadline for paper tax returns is at the end of October this year or it can be done online by 31 January 2019, but some may want to file at the start of the tax year in April if they are owed a tax refund.

 

LendInvest Syncs with IRESS & Twenty7Tec: Bringing BTL Loans to Wider Market (Crowdfund Insider) Rated: A

LendInvest, the specialist property finance lender, has partnered with mortgage sourcing partners Twenty7Tec and IRESS’s TriGold system to bring its Buy-to-Let product to more intermediaries. These sourcing systems now bring LendInvest BTL loans to the market in a faster, more efficient way to reach a wider range of customers.

Landbay Surpasses £1.4 Million Through Latest Seedrs Campaign & Announces Funding Round Closing Date (Crowdfund Insider) Rated: A

UK-based peer-to-peer lender Landbay announced on Thursday it is set to close its latest equity crowdfunding round on Seedrs next Tuesday (April 17th). The campaign quickly secured its initial £1.25 million and has successfully raised more than £1.4 million thanks to over 250 investors.

Landbay reported that more than 25% of mortgages on its platform have been originated in the last three months. The lender has had no defaults and no losses to date.

JustUs launches investment opportunity with Mersten (Manchester Business News) Rated: B

JustUs has partnered with property developer, Mersten, to launch the Innovative Finance ISA (IFISA) investment.

Initial funds will be used to renovate and develop a property in south-west London, which will help house residents with learning disabilities and those that require 24/7 care.

Founder Gandesha steps down as chief executive at Property Partner (Property Week) Rated: B

Real estate crowdfunding platform Property Partner has announced RFIB Group chief executive Marshall King as its new top man replacing outgoing chief executive and founder Dan Gandesha.

Gandesha founded the crowdfunding platform in 2015 and overseen year-on-year revenue growth of more than 100% since then as chief executive. He will remain in the company as a member of the board but has stepped down from the top position ahead of plans to relocate to Ireland with his family at the end of the month.

REITs still offer a huge opportunity for the sector (Inside Housing) Rated: A

Combined with the greater flexibility enjoyed by private investors since the pensions freedom reforms of 2015, this has spawned the rapid growth of a new investment class known as “alternative income”.

Although these funds are structured as equity, investors are looking for something which is more akin to a fixed income product, ie stable sources of income (dividend yields are usually 5% or more and sometimes index linked) backed by secure revenues from real assets or other receivables.

More recently another REIT called Fundamentum launched a £150m fundraising in spite of recent sharp falls in the share prices of two social housing REITs.

How to master investment portfolio diversification in 2018 (IG) Rated: B

1. Invest via funds

Funds offer instant diversification, by spreading your investment across a range of stocks and shares which are all linked by a common theme. If you have an interest in one particular sector or geography, a dedicated investment fund is a great way to introduce your money to new areas without taking on too much risk.

2. Create a balanced portfolio

Traditionally, a ‘balanced’ portfolio refers to a portfolio which is largely split between equitiesand bonds, with a small amount of money held in cash.

3. Review your portfolio regularly

As your portfolio matures, you will find that your risk appetite or investment goals change significantly.

China

Private P2P Lender Shanlin Finance Under Investigation (Capital Watch) Rated: AAA

On April 10, Shanghai-based peer-to-peer lending company Shanlin Finance, which reportedly has over $2 billion in assets under management, was shut down by Shanghai authorites. On the same day, investors reported difficulities withdrawing money from Shanlin’s homepage, and the Shanlin Fortune App, which officially launched on May 10, 2016, could no longer be opened.

On that evening, reporters from a website, ndb.com, went to Shanlin’s headquarter in Shanghai and found the office area was still brightly lit, and a display screen in its lobby was still playing Shanlin Finance’s promotional videos. However, there were no employees working in the office, except several security personnel, and at least five workers were using carts to carry a number of packed carton boxes to a truck parked outside the building.

India

Indian fintech Kaleidofin raises $ 2.8 million for services to unbanked (Impact Alpha) Rated: AAA

About 200 million households in India have no access to formal banking, insurance and investment services. Chennai-based Kaleidofin uses algorithms to tailor financial services to the needs of the unbanked. Investors includes Omidyar Network, Blume Ventures and individual investors.

Asia

PublicInvest maintains outperform on N2N Connect (The Star) Rated: A

PublicInvest Research said it is favourable on N2N Connect Bhd‘s prospects and maintained its outperform call on the stock while awaiting more details on its latest stake acquisition plan.

N2N had announced that it plans to acquire 28% interest in Australian-based OurMoneyMarket Holdings Pty Ltd for A$2.8mil cash.

Authors:

George Popescu
Allen Taylor