Grupeer project was launched in late February 2017. Grupeer’s vision is to offer the following functionalities:
- Sale of claim rights for already issued loans;
- Formation of investment pools for real estate development projects;
- Sale of shares of companies with investment potential.
At this stage only claim right purchase offers are online. We intentionally did not accelerate the development of the project, because we needed to test the accounting system thoroughly.
The objective of the project is to provide investors with a choice, gathering in one place all the best P2P and crowdfunding mechanisms, as well as bringing to the market the investment mechanisms which are fundamentally new for Europe.
At the moment the project is registered in Latvia. This is done because Latvian law permits the sale of claim rights. However, in Latvia classical crowdfunding, under which the investment pool is formed, is not allowed, but the rest of our other projects imply this investment mechanism. For this reason, we are currently negotiating with Estonia, as in Estonian jurisdiction it is allowed. We hope that within the next month we will receive permission from Estonian supervisory authorities, and then the project will change its jurisdiction and will be able to offer various types of investment on the same Platform.
Grupeer top management has solid experience, primarily in investing in real estate projects. Two persons of our team hold PhD in Economics. The team of IT professionals and lawyers has extensive experience in international commercial law, implementation of payment system and electronic money projects, as well as the development of mechanisms for cross-border payments.
At the moment, we offer to the investors projects from both independent (non-affiliated with Grupeer) loan originators and from the company that belongs to Grupeer major owner.
For the projects proposed by the company, affiliated with Grupeer, a real estate collateral is provided in favor of the Platform. Subject to the mechanisms the Estonian Regulator will approve, it will be clear in what direction the Platform will develop. If we decide to actively develop the sale of claim rights, then for sure there will be proposals from classic generators of offers – credit companies. Basically, these will be auto loans and mortgage loans. The Platform is not planning to offer “quick loans”, as we see too many legal risks in recovering debts. At the moment, there are already fundamental agreements with Estonian large credit companies. If we get all approvals from Estonian regulatory bodies, we will actively promote classic crowdfunding projects. In this case, our clients will be able to invest in equity participation in development projects implemented in Germany, as well as to acquire shares of capital in investment property.
Depending on the type of investment, the expected profitability is 8-9% per annum when investing in the purchase of capital shares, and up to 14% when investing in the purchase of claim rights and in loans for development projects.
When investing in capital shares, the investor becomes a co-owner of a company owning real estate that is rented. Real estate management will be provided out by our affiliated company. At the moment, we have not yet received approval for this project. However, we see a great future for this type of investment.
With classic crowdfunding (formation of a pool, which serves as a loan for the implementation of commercial projects), the borrower of funds provides a pledge of real estate in favor of investors. The pledge holder is a specially founded SPC company (managed by a law bureau). Thus, in the event the borrower does not repay the funds, the investors are not dependent on the Platform or credit companies; the debt is recovered by selling the collateral that the law bureau will perform. This mechanism has already been agreed and we hope that in the near future we will launch it. In principle, this is a well-known mechanism used by Estonian companies.
When investing in the purchase of claim rights, a BuyBack guarantee is provided for all loans. The guarantee is provided by the loan originator. All loan originators need to pass a scoring procedure, performed by an independent financial company, AG Capital. Only after assessing the solvency of the loan originator we take decision on the amount of offers from this partner to be presented in our Platform. Each loan offered by the partner also passes compliance procedure, performed by the Platform employees. In addition, we have quite strict partnership agreements, under which in case the partner fails to fulfill at least one BuyBack, the Platform is entitled to request BuyBack of all credit obligations. That is, in these circumstances, the investor will not need to deal with his problems himself, as the Platform with all its legal and administrative resources will block the activities of the loan originator and take over the claim rights under all loan agreements between the credit company and the borrower. Unfortunately, I cannot provide you with more details on our partnership agreements, as it is our unique business model.
Investors’ money is placed on a dedicated investment account and we do not have the right to use it for our operational needs. The money received from loan originators is also credited to a dedicated investment account.
The AutoInvest system has not been implemented yet. We still assess whether it is necessary.
As regards the prospects of P2P and crowdfunding market, it is obvious that in Latvia, by the end of 2017, a law regulating the activity of P2P credit platforms will be adopted. The law will be fairly strict. That is, the state will begin to interfere with the activities of P2P platforms and dictate their own rules of the game to them. In addition, the Latvian state began to execute some pressure on credit companies, limiting the amount of the rights of claim they are allowed to sell through P2P platforms, and even forbidding it for some of the companies. This should have been expected sooner or later. Therefore, it seems to us that soon the boom of Latvian platforms will end up and the interest rates offered by Latvian platforms will start to decrease.
In our opinion, in the near future new investment mechanisms will emerge that will lure the investorsaway from purely speculative, but highly profitable claim rights purchase deals to direct investments in commercial projects and rental real estate. Therefore, those platforms that will be able to offer economically attractive and sound projects will be the winners. We do hope to be one of them.
To find more about grupeer please visit : https://www.grupeer.com/
We thank Ludmila Yadchenko Board Advisor, CFO of Grupeer for writing this feature.