[P2P Lending] Knowing all the SC approved P2P operators

After understanding how and why P2P lending existed nowadays (click here to read our previous article), let's move on knowing all the approved P2P operators in Malaysia now.

Below is the intro of SC approved P2P operators (as at end Aug 2018):

1. B2B Finpal Sdn Bhd (B2B Finpal)
   

   * A local P2P lending player founded by two prominent businessman.

   * Its parent company B2B Commerce Sdn Bhd has extensive experiences in providing supply chain management software to SMEs.

   * Thus, it already has a customer base that includes companies in retail, fast-moving consumer goods, oil and gas, manufacturing and logistics across the region.

   
   
   
   
   
   
2. Ethis Kapital Sdn Bhd (Nusa Kapital)
   * The world’s first regulated Shariah-compliant P2P Crowdfunding Platform.
   * Founded by experienced individuals with regional SME industries exposure.
   * Focusing on projects that are both commercially viable and socially responsible for its crowd of ethical and Islamic investors.
   
   
   
   
   
   
3. FBM Crowdtech Sdn Bhd (Alixco)
   * The only Registered Market Operator in Malaysia that operates both P2P financing and Equity Crowdfunding (ECF)
   * A Swedish-based company, is the fastest growing crowdfunding platform in Europe with more than 86,000 investors across 196 countries; raising over EUR 37 million for 472 companies.
   
   
   
   
   
4. Modalku Ventures Sdn Bhd (Funding Societies with referral code: jf95qsa4)
   * Founded by two Harvard university students
   * A regional P2P lending player operating in Singapore, Indonesia and Malaysia.
   * Bringing with it the best practices from it's experiences in regional markets.
   * Having a track record of maintaining default rate at below 2%.
   
   
   
5. 
   Peoplender Sdn Bhd (Fundaztic with referral code: HndCCl)
   * Founded by prominent ex-bankers and top executives of the banking/credit industry.
   * Bringing with them more than 50 years of combined expertise in finance, legal and technology.
   
   
   
6. 
   QuicKash Malaysia Sdn Bhd (QuicKash)
   * A unit of Bursa Malaysia listed company, ManagePay Systems Bhd.
   * Leveraging on MPAY's deep understanding of the fintech industry.

In our next article, we will blog about the differences between two of the most popular P2P operators. Stay tuned!

[Crowdfunding] What is P2P financing? And, what's in it for investors?

Peer-to-peer (P2P) financing is a web-based innovation that broadens the ability of entrepreneurs and small business owners to unlock capital from a pool of individual investors in small amounts and provides a quick turnaround time to obtain financing for their businesses, through an online digital platform. P2P Financing is already a well-established concept in the USA, UK, and China, amongst many other countries.

Instead of the traditional ways of sourcing funds from financial institutions (which normally takes longer processing time and stricter rules), P2P financing serves as an alternative financing method for SMEs to raise funds for working capital or business expansion.

How does P2P work?

P2P operator facilitates businesses or companies to raise funds from both retail and sophisticated investors through an online platform. Through the SC registered P2P platform, an investor may invest in an investment note or an Islamic investment note issued by businesses or companies for a specified tenure with the expectation of a predetermined financial return.

How does an issuer (company) raise funds through P2P?
When an issuer applies for funding, the P2P operator will evaluate the issuer’s suitability, among others, by assessing its capacity to repay through credit history checks and analysis of any alternative data.

These factors allow the P2P operator to assess and assign a risk score to the investment note or Islamic investment note issued by such issuer. Such issuance will then be hosted on the P2P platform where investors will then select and invest accordingly.

How does an investor invest through P2P?

In general, upon understanding and analysing the information disclosed by issuers concerning its business, financing purpose, and financial information; credit assessment; repayment schedule and risk information published on the P2P platform, an investor will then make an informed decision on the issuers and amount they wish to invest in.

"For example, Issuer X issues an investment note which seeks to raise RM100,000. The investment note is rated “A” with a rate of return 0.5 percent per month for a 12-month period. 

Therefore, the investor that chooses to invest in Issuer X in such amount he so decides, he will receive monthly repayments (principal and returns) for the duration of the investment note."

Anyone also can invest in P2P?
Yes. P2P investment opportunities are open to all investors. Retail investors are encouraged to limit their investments exposure on any investment note or Islamic investment note executed or offered on or through a P2P platform to a maximum of RM50,000 at any one time in order to manage their risk exposure.

However, retail investors should be aware and cautious of the risks of investing in investment note or Islamic investment note beyond the advised RM50,000 threshold.


Good. What's the interest/return like?

Depending on the risk scoring of the issuer, an interest rate from 8% up to 18% is expected from an investment note. However, please take note that the higher interest rate offered means the higher risk of default as well. Anyway, the average simple interest rate offered by most of the issuers are within the range of 10% to 14% per annum. It's pretty attractive to most investors.

Is it risky to invest in P2P notes?

The only risk of P2P investing is the default risk of the issuer. So, the credit assessment performed by a P2P operator is crucial to determine the risk and published relevant information to investors to make an informed decision, whether or not, to invest in that particular note.

Considering that the primary objective of introducing market-based financing is to help build small businesses which in turn help to spur and promote the growth of the economy, hence the P2P operator is NOT permitted to facilitate individuals seeking personal financing.

In Malaysia, ONLY locally registered sole proprietorships, partnerships, incorporated limited liability partnerships, private limited and unlisted public companies can raise funds via a P2P platform. Unlike some other countries, Malaysia has more stringent rules in place, hence relatively safer for investors.

Trust Account?

Yes. Similar to unit trust investment structure, a P2P operator must ensure that monies obtained from investors and issuers are placed in a third party trust account until the appropriate disbursements are required to be made. This is to avoid the misappropriation of investors' monies by P2P operators.

List of Approved P2P Operators as at Aug 2018 May 2019:

1. B2B Finpal Sdn Bhd (B2B Finpal)
2. Ethis Kapital Sdn Bhd (Nusa Kapital)
3. FBM Crowdtech Sdn Bhd (Alixco)
4. Modalku Ventures Sdn Bhd (Funding Societies with referral code: jf95qsa4)
5. Peoplender Sdn Bhd (Fundaztic with referral code: HndCCl)
6. QuicKash Malaysia Sdn Bhd (QuicKash) 
7. Bay Smart Capital Ventures Sdn Bhd - new
8. Capsphere Services Sdn Bhd - new
9. Crowd Sense Sdn Bhd - new
10. MicroLEAP PLT - new
11. MoneySave Capital PLT - new

Preliminary Peer-to-Peer Key Statistics (as of June 2018)

In our next article, we will blog about each of these P2P platforms in Malaysia. Stay tune!