Synergy European Crowdlending Fund monthly review (March 2020)

We are continuing with the monthly report of the Synergy European Crowdlending Fund (the Fund) in which we briefly overview what is happening in the European P2P and crowdfunding market and how it affects the performance of the Fund.

Monthly result: -0.42%
Result from the beginning of the year: +0.90%
Result from the start of the activity: +30.76%

Last month, in response to global spreading of COVID-19, investors sold off everything they could sell. At the very epicentre of the fall, losses of various asset classes were equated to the crisis of 2008 and the price fluctuations during the month were even equated to the period of the Great Depression of 1929. However, unprecedented economic rescue plans announced by central banks and positive signs that spreading of virus in Europe has begun to slow and that were the reasons why the situation of market falling has faded and instead of panic there is a cautious mood.

March was also a special month in the crowdfunding and private debt markets. Since the middle of the month, when the state borders were closed, the notaries, bailiffs and courts have stopped their work. It is not a surprise that crowdfunding platforms have also faced extraordinary challenges. The majority of the investors have suspended “autoinvest” portfolios and have changed their active positions to waiting. That is why loan originators have many difficult challenges in managing their financial flows.

It is good that the pandemic has not done serious consequences so far but the platforms have already begun to increase interest (from 1-2% to 5-6%) on new investments in order to keep investors. Meanwhile, there are even higher bonuses for those who invest in the secondary markets.

Platforms, providing investment data publicly, through the month of March, funded EUR 404.1 million of loans and the Latvian platform – Mintos, funded EUR 158.3 million of loans (decrease of 50.11% from the previous month).

Respectively, platforms Zopa and Ratesetter, which are registered in UK, were in the second and the third place, financing 78.9 million EUR (decrease of 23% from the previous month) and 50.2 million EUR (decrease of 18% from the previous month) of loans.

After Mintos, Twino, PeerBerry, Bondora, EstateGuru and Viainvest financed most of the loans in Baltic States, respectively, 13.9 million EUR, 12.2 million EUR, 9.6 million EUR, 9.3 million EUR and 4.2 million EUR.

Platforms, providing investment data publicly and funding to Lithuanian businesses and individuals, collected EUR 3.964 million in March (decrease of 26.26% from the previous month).

The distribution of funded amounts of loans was as follows (brackets shows the changes compared to the previous month):

  • Paskolų klubas – EUR 1.521 million (decrease of 8.65%);
  • Lenndy (Latvian based platform) – EUR 637 thousand (decrease of 33.1%);
  • Finbee (consumer and business loans collectively) – EUR 796.3 thousand (decrease of 26.55%);
  • Savy – EUR 540 thousand (decrease of 22.62%);
  • Profitus – EUR 469.7 thousand (decrease of 51.89%).

Synergy European Crowdlending Fund closed in March with a slight -0.42% decline in value due to the write-off of several insolvent loans. The net asset value at the end of the month was EUR 19.264 million. Since the beginning of its activity, the Fund has reached almost EUR 62 million of funded loans. It is nice to see that Lithuanian government is looking for ways to support small and medium business. The main institutions provide an opportunity to defer payment of taxes without any interest for those businesses that have financial difficulties because of COVID-19. There is also an opportunity to receive a wage compensation subsidy for those employers who have to declare a downtime.

It should be noted, that INVEGA provides support to the participants of the alternative financing sector (https://invega.lt/lt/covid-19/naujos-priemones/). Also there are plans of the portfolio guarantees and liquidity loans to participants in the alternative financing sector which should be presented for delivery this month. For this reason, we continue to significantly increase the share of Lithuanian business loans in the fund’s portfolio, which will not only potentially improve the profitability-risk ratio for the fund’s investors, but also provide an opportunity to indirectly contribute to the promotion of Lithuanian business in this difficult period.