Disclaimer: Please still do your own due diligence before investing in any P2P lending platform. I am just an investor trying to bring some value to the crowdlending community.
Date of interview: 29/01/2020
Interview with the CEO of PeerBerry – Arūnas Lekavičius
1 – What’s the value of PeerBerry in terms of investors, loans funded and actually interest paid to investors? Are there a lot of default loans?
We are happy, that more than 18 200 investors expressed their trust in PeerBerry and the number of investors is constantly growing every day. During two years of our operations, investors via PeerBerry already funded 192 million EUR loans and earned 1,9 million EUR interest.
2 – I noticed that PeerBerry is registered in Latvia but that the beneficiary bank address to add funds to the platform is located in Lithuania. Why?
At the very beginning of operations, Peerberry used Swedbank as a payment provider and in July of 2018 Peerberry management decided to change it to Paysera LT. The main reasons for this change:
- Cost efficiency;
- Smart technological solutions;
- Paysera Lt is providing its’ service entire more than 180 countries;
- PeerBerry HQ is in Lithuania and it is very important that we can use a payment provider from the same country. It gives us the possibility to solve appearing issues faster if it arises from technical side with payments.
3 – What kind of due diligence do you make before choosing a loan originator?
PeerBerry loan originators are periodically evaluated according to our internal procedures. The evaluation includes both – the financial situation, the quality of the loan portfolio and the analysis of applied internal processes. We care about our investors’ money and our reputation, so we make sure, that loan originators are able to fulfill their obligations and it doesn’t matter in which country loan originator operates. Also, a very important part of the risk handling strategy is that we are in cooperation with loan originators from 3 strong Groups. These Groups are in business for more than 10 years and have an excellent reputation, profitable performance, professional management. Share of portfolios in Peerberry by Groups:
- Aventus Group loans at PeerBerry accounts is 80% of total loans in the platform;
- The share of another partner Gofingo – about 15%;
- Lithome – about 5%.
4 – How often do you visit these loan originators and make sure they’re wisely using the funds lent by investors?
With Groups management we have conversations almost every day, we know the latest information about results, changes and etc. We are in a very close cooperation and trust in each other because the main target is to run sustainable, profitable and reliable business.
Additionally, at the end of every month, we have meetings with all three Groups management and review monthly results of every Group and every loan originator separately. We visit our loan originators in different countries on a quarterly basis and make sure together with Groups Management that investors’ money are used very responsibly and purposefully.
5 – Where can we see the proof that you’ve actually been doing research and due diligence on your loan originators?
We’re guided by high-level business ethics, we never hide any of our loan originator or any other kind of information. We always provide information on our platform about every loan originator and its quarterly results. Every investor can easily find information about every loan originator and check company web page, activities and management. If investors want and ask us, we always provide financial statements of every loan originator. We are constantly updating and sharing with our investors the latest information about Aventus group, Gofingo, and Lithome achievements via emails and in our blog.
6 – Have you stopped cooperating with any loan originator so far? What was the reason behind it and what can you do in the future so there’s a reduced chance you’ll have to deal with similar situations?
Loan originators who are listing loans or projects on the PeerBerry platform are operating under Aventus Group, Gofingo Group, and Lithome. All loans listed on PeerBerry platform have Buy-back guarantee and most of the loans offered on PeerBerry platform are double secured providing buyback guarantee together with additional guarantee. In case some loan originator will face financial troubles and will not be able to implement a buyback guarantee, the additional guarantee will ensure additional protection for our clients’ investments. Additional guarantee means that in case of insolvency, Aventus Group and Gofingo will do everything on purpose to protect investors’ investments, maintain transparency and good reputation of all partners – loan originators. In 2019 we stopped cooperation only with one loan originator from Denmark which was a part of Gofingo Group. The main reason for that was new regulations in Denmark, which were unfavorable for further business development. The profit of the company has decreased. Loan originator implemented buy-back for all the investments of our investors and paid interest without delay once the decision was made not to continue operations in the Denmark market. It shows the strength of our partners and timely decisions to avoid defaults in projects.
7 – Have you shared all of the default projects so far? Can we see anywhere in your company’s website information about projects that didn’t go so well? I think this is important for investors too, i.e., to see transparency from your side.
We didn’t have defaulted projects so far. PeerBerry loan originators are periodically evaluated according to our internal procedures, the evaluation includes both – the financial situation, the quality of the loan portfolio, and the analysis of applied internal processes. We care about our investors’ money and our reputation, so we make sure, that loan originators are able to fulfill their obligations. Risk assessment is our priority. Since the beginning of PeerBerry activity, our investors have not suffered any losses. This fact proves that risk management stands as one of the highest priorities for us not in the words but in action. We will continue working on investments with a no-loss strategy.
8 – Are you doing something in order to accelerate the regulation of Crowdlending in Europe? How important is it for you?
We are in the process and we have provided all necessary documentation to the Latvian authorities and are waiting for the response regarding the further licensing process. I think regulations will give more transparency to all P2P business.
9 – What’s your strategy to guarantee that things will continue to go as planned in the event of a world economic crisis? Wouldn’t the crowdlending sector be particularly affected?
The top management of our partners – loan originators are following all the aspects entire economies in different countries they operate. The business model of our partners is based on responsible lending, to all clients (borrowers) are specific criteria applied for receiving a loan. We understand that risk control and financial stability of our loan originators are very important for our investors. We care about our clients and work only with those partners we can trust. It is important to note, that during two years of PeerBerry cooperation with partners (loan issuers) there were no turbulences among separate loan originators, all PeerBerry investors earn profit (no loss since the beginning of PeerBerry activity in 2017). This just proves high level of business management, risk control, and readiness to face any challenges. The main PeerBerry partner Aventus Group posted a net profit of 12,6 million Eur in 2019. The equity of the Group stood at 14,3 million Eur. This is fully sufficient to cover all the liabilities of Aventus Group. More comprehensive information about Aventus Group business performance can be found in our Blog https://blog.peerberry.com/blog/aventus-group-posted-a-net-profit-of-126-million-eur-in-2019/.
Speaking about the economic crisis scenario, in my opinion, some P2P platforms can be affected, but it depends on the risk management and business partners – loan originators, with whom platforms are in cooperation.
10 – Is PeerBerry profitable? Where can we follow the quarterly and/or annual reports?
In 2018, Peerberry was profitable and we had 98k Eur profit. Companies that are registered in the Republic of Latvia, are providing annual reports to the State Revenue Service of Republic of Latvia in the local language. If investors ask us, we always provide annual reports in two different languages and we can share at any time.
In 2019 we made significant investments in IT solutions, marketing activities, expanded our IT resources. We are investing in platform functionality, increasing capacity, improving quality of customer care and operations. Satisfied investors are our priority. Despite all investments last year, PeerBerry works profitable and we have a good trend. Assuming all investments and 2 times expanded team, we will have a similar result as in 2018. The profit should be around 50 000 – 90 000 Eur. We plan to have PeerBerry annual report of 2019 till the end of March.
11 – In the long run, would you like PeerBerry to be listed in the stock market? Why?
This question has never been under discussion and we don’t have such a plan.
12 – Do you have any plans to start or increase cooperation with loan originators from the richest countries in the world? Wouldn’t it be a great opportunity to jump to those markets? (ex: USA, Canada, Australia, England, Germany, etc…)
New loan originators are related to additional risks. We trust our partners we work with for two years, so in the nearest future, we do not have a plan to start cooperation with new companies. Our main partners Aventus Group and Gofingo now are expanding their activities in other countries. So there is a possibility that PeerBerry will add a few new loan originators from the same Groups.
13 – What are the long-term plans for PeerBerry? Do you have a vision for your company and would you like to share it with us?
PeerBerry is a successfully operating company. According to loans funded in December 2019, PeerBerry is the No 2 P2P platform in continental Europe, among the equal types of P2P business. Our main vision is to be the number one P2P platform to invest in loans, according to investors’ trust and satisfaction ratio – it doesn’t matter are you a beginner or a professional investor. For this reason, we will continue optimizing all the investing processes and other our service-related functions.
My Thoughts on PeerBerry
The PeerBerry’s CEO was very receptive to this interview and within just one business day provided all the answers.
For this moment I trust and feel the strong connections that PeerBerry has with its current loan originators. Their good results and transparency in finances make me feel confident about the future of PeerBerry.
Of course, you should take my opinion with a grain of salt and make your own conclusions.
This interview is also available on the PeerBerry’s blog.
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