Global Marketplace Lending

Transcription

1 DEC The 1 st Specialised Peer-to-Peer Lending Fund launched and regulated in the EU Global Marketplace Lending REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG

2 CONTENTS 3 Synthesis P2P Lending Fund Summary 5-6 The Evolution of the P2P Lending Industry 7-9 The Synthesis Approach 10 Our Strategies: P2P Consumer & Small Business Loans Our Strategies: Invoice Spot Factoring Our Strategies: Commodity Trade Finance Leases on Fixed Assets The Synthesis Team 24 Terms & Conditions REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 2

3 Synthesis P2P Lending Fund Synthesis P2P Lending Fund invests in consumer loans, small business loans, commodity trade finance transactions, invoice spot factoring, leases on fixed assets and other credit instruments P2P CUMULATIVE RETURNS 111,79 Synthesis P2P Lending Fund offers access to an emerging asset class not otherwise available to investors Synthesis P2P Lending Fund was launched in November 2012, and was the 1st Fund of its type to be established in the EU. The Fund aims to achieve risk adjusted returns that are superior to other fixed income strategies by investing in loans with high credit quality and short duration, thereby displaying reduced volatility and low correlation to other asset classes. The Fund has achieved an average monthly return of 0.69% since launch, and, after its initial deployment of capital, has produced positive returns for its investors every month since January Annualised Return Oct 14 Sept 14 Aug 14 July 14 June 14 May 14 Apr 14 Mar 14 Feb 14 Jan 14 Dec 13 Nov 13 Oct 13 Sep 13 Aug 13 Jul 13 RISK VS. RETURN 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% -2.0% Annualised Volatility Barclays Gbl Agg Corp TR USD iboxx USD Overall Index REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 3

4 Synthesis P2P Lending Fund CURRENT ASSET ALLOCATION (as of October 2014) TARGETED ALLOCATION Global Commodity Trade Finance 5,15 % Cash 8,73 % P2P Consumer & Small Business Loans 25% Aircraft Leasing 15% Agricultural Weighted Trade Finance 11,23 % Invoice Spot Factoring 20% 74,89 % P2P Lending-US 40% Commodity Trade Finance REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 4

5 THE EVOLUTION OF THE P2P LENDING INDUSTRY 2005 The concept of peer-to-peer (consumer) lending is pioneered in the UK by Zopa Founding of Lending Club and Prosper in the US. Lending Club originates its first loan in June MarketInvoice is incorporated in the UK for the purpose of short-term receivables financing of UK SMEs Launch of OnDeck Capital in the US, providing small business loans to SMEs Incorporation of LendInvest in the UK, and Realty Mogul in the US, for short-term bridging property finance Lending Club reaches over $1 billion in total consumer loan originations. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 5

6 THE EVOLUTION OF THE P2P LENDING INDUSTRY 2012 (Nov.) Launch of Synthesis Peer-to-Peer Lending Fund 2013 Google acquires a stake in Lending Club OnDeck Capital reaches over $500 million in total small business loan originations Ablrate is established in the UK as the first aviation leasing online marketplace Venture Capital firm Foundation Capital publishes a paper* coining the term marketplace lending Reflecting the evolution of the P2P/marketplace industry, Synthesis Peer-to-Peer Lending Fund incorporates short-term commodity trade finance transactions, invoice factoring and leases on fixed assets into its portfolio, alongside consumer loans and small business loans. *A Trillion Dollar Market By the People, for the People. Charles Moldow, 2014 See REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 6

7 THE SYNTHESIS APPROACH The Synthesis-P2P portfolio reflects the evolution of the P2P industry, building on our initial exposure to consumer loans by strategic diversification into other types of credit. Synthesis takes a more active approach than simply investing anonymously through online platforms. We have established a series of strategic partnerships, aiming to capture the advantages and opportunities of P2P lending, whilst avoiding some of the pitfalls. P2P/marketplace lending is still a fledgling industry; the vast majority of online platforms are start-ups with little operating history. Synthesis prefers to work directly with experts with a long experience of the credit market/industry in which they operate. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 7

8 THE SYNTHESIS APPROACH In carrying out extensive due diligence on potential partners we particularly look for: Teams comprised of experts with a long experience of the credit market/industry in which they operate. For example, we have chosen to work with: An invoice factoring company with 40 years operating history A structured commodity trade finance company whose key members each have years experience A company with over 45 years experience of aviation leasing profitable from inception and without a single default on a lease to date Companies which are prepared co-invest in deals ( skin in the game ). Our investments in invoice ( spot ) factoring, for example, are carried out under a syndication agreement, whereby our partner company the central underwriter participates in each and every transaction. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 8

9 THE SYNTHESIS APPROACH An offering focused on securitized deals. Whilst most online platforms auction unsecured invoices, for example, Synthesis-P2P invests only in invoices with recourse. Sophisticated and proven risk management tools and processes. Robust AML/KYC procedures. Complete transparency on fees and commissions, throughout the investment chain, and openness to fee reductions / fee sharing to the benefit of Synthesis investors. Potential for sustained growth. Many years of research on the P2P industry from its origins, much of it on the ground, and early identification of new opportunities allow the team to move fast whilst maintaining an informed and risk averse-approach to portfolio construction. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 9

10 Our Strategies: P2P CONSUMER & SMALL BUSINESS LOANS The recent banking crisis, combined with innovation in internet technology (Web 2.0) has led to the creation of specialized online platforms, which bring together a large number of private lenders and borrowers, both consumer and corporate. At launch, in November 2012, Synthesis-P2P seeded the first US-based fund investing in whole loans. Synthesis now invests with three specialized P2P managers, all early movers in the industry, selected for their track record, robust loan selection process and risk management framework. These established partnerships also guarantee privileged access for Synthesis to the principal US platforms - Lending Club and Prosper where capacity is increasingly limited, and new players are being turned away. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 10

11 Our Strategies: INVOICE SPOT FACTORING As an alternative to traditional bank loans (which are costly and time-consuming for borrowers), invoice factoring allows small businesses to take control of their finances, improve their working capital and cash flow positions, and thus grow their businesses more efficiently. Spot factoring is the purchase of a single or selected group of invoices by a specialized company (known as a spot ). For investors, invoice factoring can represent a high return, secure investment, if transactions are carefully selected using the relevant expertise. Synthesis has chosen to partner with a spot factoring company with over 40 years experience, and an expanding global presence. Historical default rates are close to zero. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 11

12 Our Strategies: INVOICE SPOT FACTORING The criteria for the selection of invoices (maximum concentration limits, size of transactions, industry exposure) have been pre-determined by Synthesis in collaboration with our partner company. Through an exclusive «Syndication Agreement» with Synthesis, our partner company co-invests in each individual transaction, ensuring alignment of interests («skin in the game»). In addition, unlike the unsecured investments available via many online platforms, all our invoice factoring transactions are made on a recourse basis. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 12

13 Our Strategies: COMMODITY TRADE FINANCE Trade finance is the financing of international trade. One of the oldest forms of banking, it facilities the growth of international trade, whilst displaying many attractive characteristics for investors: Consistency of returns Attractive yields Low volatility Real economy investment (tied to specific commercial transactions not a speculative strategy. Lower default rates than any other interest based asset class (see following table) REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 13

14 COMMODITY TRADE FINANCE: Some Key Statistics INTERNATIONAL CHAMBERS OF COMMERCE DATA ON TRADE FINANCE DEFAULT & LOSS Is Trade Finance a secure asset class? PRODUCT Transactions & in 000s Default % Loss % During the past 15 years, total dafaults on ALL trade finanve lines: commodities, manufacturing and pharmaceutical etc. was 0.5%. Commodity trade finance lines experience even lower defaults between : Fewer than 3,000 (or 0.026%) defaults were observed in the full dataset of 11.4 million transactions. During the recent crisis and only 445 (or 0.016%) defaults were reported out of a total of over 2.8 million transactions written through this period. Default rates for off-balance sheet trade products were especially low, with only 947 (or 0.018%) defaults in a sample of 5.2 million transactions. The data on default and loss rates (to the right), position trade finance - as an asset class - in an equivalent category to an A to AA rated credit. Loans for Export - Bank Risk ( ) Loans for Export - Corp Risk ( ) Loans for Import - Corp Risk ( ) Import L/Cs ( ) Export Confirmed L/ Cs ( ) Performance Guarantees / Standby L/Cs 955, ,073, ,009, ,398, , ,796, ,438, ,012, , ,664, , ,828, Source: ICC Trade Finance Register Data 2012 REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 14

15 Our Strategies: COMMODITY TRADE FINANCE To support its investments in trade finance, Synthesis has contracted with a leading commodity trade finance company. Based in Geneva, Switzerland since 2004, our partner company was recently winner of the «Best Commodities Trade Finance Provider Switzerland 2014 category by Global Banking & Finance Review Awards. Our partner s team benefits from over 70 years combined experience in major trade finance banks and trading companies (BNP Paribas, ING, Credit Suisse, BCV, Cargill and André & Cie SA). Our partner company provides: Deal sourcing from high quality counterparties Rigorous risk and credit analysis of potential borrowers using robust and proven risk mitigation tools and techniques Administrative support and follow-up of transactions REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 15

16 Our Strategies: COMMODITY TRADE FINANCE We have access to finance a variety of transaction types in a range of basic commodities. From both an export and import perspective, our reach is global: UNDERLYING PRODUCTS Oil Coal Petrochemicals Metals Soft TYPE OF FINANCING Transactional Cash margin Prefinancing Invenory EXPORT CONTINENTS Africa Asia CIS Europe North America ALL AROUND THE WORLD IMPORT CONTINENTS Africa Asia CIS Europe North America South America REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 16

17 COMMODITY TRADE FINANCE: Sample Deals N BORROWER S COUNTRY OF INCORPORATION TYPE OF COMMODITY TYPE OF FINANCING FINANCING BANK DRAWING CONDITION ORIGIN OF GOODS DESTINA- TION OF GOODS AMOUNT RE- TURN P.A. MAX. TENOR (DAYS) NUMBER OF DRAWINGS 1 Cyprus Bio fuel Cash margin BNP Paribas Geneva B/L Spain Albania $ % Switzerland Coal Cash margin Corner Banca Geneva B/L Indonesia China $ % Switzerland Petrochimicals Cash margin BNP Paribas Geneva CMR Germany Turkey $ % Monaco Steel Cash margin ING Belgium, Geneva Branch B/L UAE USA $ % Switzerland Manganese ore Discounting BCP Geneva Confirmed export LC Turkey Serbia $ % Cyprus Bio fuel Cargo financing N.A. B/L Spain Albania $ % 45 4 REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 17

18 Our Strategies: LEASES ON FIXED ASSETS Investing in leases on fixed assets reflects the «real economy» focus of Synthesis. As a primary theme, we have chosen to invest in aircraft leases. As an investment, aircraft have the following advantages: proven value curves low volatility regulation and protection under international law systematic insurance coverage aircraft are maintained to strict schedules, and are moveable from low demand to high demand areas very quickly REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 18

19 Our Strategies: LEASES ON FIXED ASSETS Before the financial crisis, an aircraft lessor would typically have 80% of the aircraft financed by the many banks involved in the sector. Now, with banks under pressure to preserve capital, these loan to values ( LTV ) have been reduced to 60%- 70%. This opens up the possibility for third party investors to fill the funding gap. Synthesis is advised by a specialized company, whose Chairman, a 40-year aircraft industry veteran, was one of the first to use the concept of operating leases to finance aircraft. The team is comprised of experts in aviation, leasing, operations and technology. This advisory relationship is contractual, but in line with our partner company s policy of not charging fees to lenders, Synthesis benefits from investment advice at no extra cost to investors. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 19

20 Our Strategies: LEASES ON FIXED ASSETS Current pipeline and volume of business TYPE SUBMODEL DELIVERY YEAR ENGINE TYPE PURCHASE PRICE LESSEE LOCATION MONTHLY LEASE YIELD% ATR 42 ATR x PWC PW127 $ Latin America Latin America $ %+ ATR 72 ATR x PWC PW127 $ Brazilian Airline Brazil $ %+ ATR 72 ATR x PWC PW127 $ European Airline Germany $ %+ ATR 72 ATR x PWC PW127 $ European Airline Germany $ %+ ATR 42 ATR x PWC PW127 $ Latin American Airline Latin America $ %+ ATR 72 ATR x PWC PW127 $ Asian Airline Asia $ %+ ATR 72 ATR x PWC PW127 $ Asian Airline Asia $ %+ ATR 72 ATR x PWC PW127 $ South East Asia South East Asia $ %+ ATR 72 ATR x PWC PW127 $ South East Asia South East Asia $ %+ ATR 72 ATR x PWC PW127 $ South East Asia South East Asia $ %+ LEASE ESTIMATED: $ REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 20

21 THE SYNTHESIS TEAM SYNTHESIS MULTI-ASSET ARCHITECTURE SICAV-SIF, SCA, is managed by its General Partner, SYNTHESIS (LUXEMBOURG) S.A. The four members of the Board of Directors of SYNTHESIS (LUXEMBOURG) S.A are supported in their functions by: an ADVISORY COMMITTEE at the level of the SICAV, providing general and specific advice on matters of strategic decision-making, including a focus on identifying potential conflicts of interest within the structure. an INVESTMENT COMMITTEE at the level of each Sub-Fund, comprised of individuals with specific expertise and experience in the core strategies of the Sub-Fund. The Investment Committee provides recommendations on investment policies and guidelines, reviews the performance of individual investments and recommends changes where appropriate to ensure that the investment objectives of the Sub-Fund are being met. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 21

22 THE SYNTHESIS TEAM BOARD OF DIRECTORS of SYNTHESIS (LUXEMBOURG) S.A. Spyros Papadopoulos Chairman & CEO Spyros has over 16 years of experience in alternative investments. He began his career in Private Banking, first with Citigroup in London and Geneva, where he was the key contributor to the development of both the Spanish and Greek Wealth Management Desks, and then with Société Générale in Athens, where he was instrumental to the expansion of the Greek Private Banking division. Spyros resigned from Private Banking in 2006 to set up an asset management company for Deloitte, before returning to London as Director of the Hedge Fund Absolute Return Partners. He left to found Synthesis in June His clients came through unscathed, and indeed profited, from the crises of and 2007-present. Spyros holds the Investment Management Certificate of the CFA-Society of the UK. Marc Lefèbvre Chief Compliance Officer Marc started his career as an auditor of investment funds at PricewaterhouseCoopers. He then moved on to Nordea Bank to assist with Compliance, Anti-Money Laundering and Legislation issues and set up controls and processes to ensure efficient monitoring. Later, as Board Member and Conducting Officer with Glitnir Bank, he was instrumental in setting up the investment fund arm of the bank. Marc subsequently set up his own advisory firm, LEVeL Advisory, providing services to the asset management and banking sector. Marc holds a Masters Degree in Finance and a Masters Degree in Control from HEC. He is a Certified Director of the Luxembourg Institute of Administrators (ILA), and a certified Senior Fund Specialist and Compliance Officer of the Institut de Formation Bancaire in Luxembourg. Manuel Bertrand CFO-Chief Financial Officer Manuel a CSSF Authorized Director in the investment fund sector, acting as executive or non-executive Director. Manuel previously headed the Finance & Administration management activities of several industrial companies, both at subsidiary and mother company level, where his primary focus was to ensure the existence and the communication of accurate and reliable financial data. Manuel gained his first experience at PricewaterhouseCoopers, Liege, where he was in charge of the audit of a number of major industrial companies. Manuel holds a Degree in Commercial Engineering from HEC in Belgium. Aristides Protopapadakis Managing Partner Risk Management Aristides has a banking background, with a wealth of experience in derivatives, risk analytics, and financial software systems. Prior to setting up Systemic Risk Management Solutions, he acquired extensive experience in the above areas while holding senior positions at Citibank, ABN Amro, and Bank of America in Treasury and Risk Management units. Aristides holds an MBA in Commercial Engineering from the Solvay Business School (Université Libre de Bruxelles). REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 22

23 THE SYNTHESIS TEAM MEMBERS OF THE ADVISORY COMMITTEE & INVESTMENT COMMITTEE Phil Millo Member of the Advisory Committee Phil is an experienced entrepreneur and finance professional, and has conducted business in Europe, North America, South America, and Asia. He is a specialist in a number of alternative investment sectors and sits on the investment committee for a pool of proprietary capital whose strategies include private and structured credit. He is a retained strategic advisor to a number of asset managers, corporate entities, and family businesses, with aggregate assets in excess of USD 60 billion. With a strong interest in information technology, he has been involved in the internet business since 1995, and was commended by the industry as one of its 100 most influential people in the last decade. Phil holds an MA in Mathematics from Oxford University (UK) and is based in London. Dimitri Rusca Member of the P2P Investment Committee A Swiss citizen, Dimitri has more than 20 years experience in trade finance, structured finance and commodities trading. Before founding SCCF Structured Commodity & Corporate Finance in 2004, Dimitri was Vice President at BNP Paribas (Suisse) SA and Advisor to the Chairman of the Board of BNP Paribas ZAO in Moscow. Previously, Dimitri worked for a number of Swiss banks. and at the Finco division of André & Cie SA, a major Swiss commodities trading company with 125 years operating history. David Phipps Member of the P2P Investment Committee Having worked in the financial industry for almost 30 years, David has built up significant and broad experience in Commodity Risk Management, Commodity Trading and Financing of Commodities. David has held senior positions at investment banks, including Head of Commodities at ABN AMRO Bank NV, Co-Global Head of Commodities at ETD UBS AG, CEO of a London Stock Exchange listed trading company and Head of Portfolio Management at a Fund of Funds. David has extensive knowledge of market and credit risk management including risk mitigation products in physical, on exchange and OTC products. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 23

24 Synthesis Multi-Asset Architecture SICAV-SIF, SCA: SYNTHESIS P2P Risk-Adjusted Targeted Return 8%-10% over LIBOR (unleveraged) Management Fee 1.5% p.a. Performance Fee 10%, providing annual returns exceed 7,5% (not cumulatively) Minimum Investment 125,000 (or $ equivalent) High water mark Yes Status Open-ended Subscription Monthly Redemption Quarterly with 60 days notice Legal Form SICAV-SIF Jurisdiction Luxembourg Supervisor Commission de Surveillance du Secteur Financier (CSSF) Custodian & Administrator Edmond de Rothschild Europe Auditor Deloitte S.A. Legal Counsel Allen & Overy REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 24

25 Disclaimer This document is not intended for any citizen of the United States or any other person or entity subject to U.S. Securities law. Without any limitation, this presentation does not constitute an offer, an invitation to offer or a recommendation to enter into any transaction. The information herein does not constitute the provision of investment advice or a recommendation; its sole purpose is to generate interest for a product proposal. Changes to this presentation may be made without notice. Opinions expressed may differ from views set out in other documents. Although the information contained herein has been taken from sources, which the authors believe to be accurate, no warranty or representation is made as to the correctness, completeness and accuracy of the information or the assessments made on its basis. The authors do not accept liability for any damage arising from the reliance on this presentation. This presentation may not be distributed by the recipient to any other person without the express written consent of the authors. Each recipient of this presentation is expected to be sophisticated and capable of independently evaluating the merits and risks of an investment in the product. If an investor decides to invest in the fund, the investor does so in reliance on his own judgement. Investing in the product reflects a particular market view the recipient of this presentation has taken independently from the authors. When making an investment decision the recipient of this presentation should rely solely on his own market and financial research and not the information contained here in. The product described herein may not suit all investors and before entering into any transaction each investor should take steps to ensure that he fully understands the product and has made an independent assessment of the suitability of the product, including its possible risks, in light of the investor s own objectives and financial situation. In particular, investing in the product may result in the return of less than the investor s original investment and even the total loss thereof. Any investor should seek advice from its professional advisors in making such assessment. REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG 25

26 REGULATED BY COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER, CSSF, LUXEMBOURG Head Office: 20, Boulevard Emmanuel Servais, L-2535 Luxembourg Grand Duchy of Luxembourg Tel: , Fax: (Shareholder Operational Support, Edmond de Rothschild Europe) (for general enquiries): Cell: &