Recent trends in the Thai lending landscape, including the impending implementation of International Financial Reporting Standard 9 (IFRS 9), have urged banks to be more cautious and more selective in providing loans, making it increasingly costly for small- and medium-sized enterprises (SMEs) to access credit.
Interview with Vorapon Ponvanit
The Founder & CEO of PeerPower Company Limited, has over 18 years of experience in investment banking. He worked in Morgan Stanley in New York and Hong Kong before co-founding a boutique financial consulting firm, which specialises in cross-border mergers and acquisitions, structured finance, and capital raising. Together with a dedicated team, Mr. Ponvanit founded PeerPower in 2016 to address growing gaps in lending and investing.
What does PeerPower stand for?
We are an online marketplace for business loans – we strive to give the business owner loans at better rates while the investor receives monthly cash flow at yields of 8-10 percent. Our first principle is about building a Trusted Platform, where we can build a community of borrowers and investors in a mutually supporting arrangement.
We believe that the world of financial services is moving towards being customer-centric and frictionless. Business owners are getting savvier with technology, both in how they engage with their customers and how they discover business solutions – from logistics, marketing services, to financing options. PeerPower wants to be the choice online lender for business loans. Being responsive and relevant to our customers is the way to go.
How did you get started?
There are many marketplace lending companies around the world, each with a specific segment focus. For example, SoFi started with education loans in the US, while the UK’s Prosper focuses on consumer loans.
PeerPower launched its first SME-unsecured term loan product in May 2017. We began building a community of borrowers from our circle of business contacts who, in turn, referred other business owners to us. There’s a close correlation to high-quality borrowers referring other high quality borrowers: a virtuous cycle that we intend to keep.
PeerPower at Money Expo 2017 and SEC FinTech Challenge 2016
Reflecting on the year we’ve had, our SME loan book has grown 3x since the start of the year and our default rate to date is 0%. Amid this growth, our focus is on building a trusted and sustainable marketplace.
Vorapon demonstrating product to Dr. Veerathai Santiprabhob, Governor of the Bank of Thailand, at Bangkok FinTech Fair 2018
Who is the typical borrower on PeerPower?
Most of our borrowers are in services and retail. All applicants must have at least one year in operation. They range from software development houses to design & build furniture makers to a Japanese restaurant expanding its operations. It’s fascinating for us to learn about these businesses and their growth ambitions as well as to meet the entrepreneurs behind the plans. I’d say it is the steadfastness of the entrepreneurs and proven track record of responsible financial management that is typical of our borrowers.
We credit score all applications and believe that no two borrowers are alike, so we tailor the interest rate to the risk profile. We do that with risk-based pricing based on financial and behaviour indicators, so providing a holistic view of each SME we help.
What does PeerPower offer investors?
Marketplace loans is a US$200 billion asset class globally (Morgan Stanley). They share some characteristics with short-maturity bonds and high-yield bonds. For this reason, many investors look to marketplace loans to diversify their investments in equities, property and corporate bonds while receiving monthly cash flow of principal and interest. In Southeast Asia, there are positive signs of growth, with marketplace loan books of above US$100 million and growing interest from investors.
PeerPower focuses on Accredited Investors which the Securities and Exchange Commission (SEC) defines as:
1. Institutional investors such as commercial banks, mutual funds, private funds and public companies; and
2. High net worth investors i.e.
(i) an individual who has at least 50 million baht in total assets or 4 million baht in annual income or 10 million baht investment in securities (can be combined with that of spouse) or
(ii) a juristic person having shareholder equity of at least 100 million baht or securities investment of at least 20 million baht.
Typically, investors in our platform are themselves business owners. They look closely at our SME loan factsheet with detailed business descriptions and key financial ratios. They select sectors and businesses that they understand. As a marketplace PeerPower makes it easy for investors to compare which loans are up for funding while ensuring that investors are diversified across loans and can track their loan portfolio performance on the move.
To find out more, please register your interest at the PeerPower website or call our investment consultants on (+662) 026-3514 ext. 2