Last update - November 2017
A Mintos lender recently blew up
In June 2017, Mintos lender Eurocent announced that it was in serious financial difficulties. We covered these problems in a recent post. Eurocent has now defaulted on its Mintos 'buyback guarantee' commitments. It looks increasingly likely that Mintos investors will suffer some losses.
This has inevitably led investors to pay more attention to the quality of the other lenders on the Mintos platform. Recently we listed 9 lenders that we would not touch right now. We have now broadened our analysis to cover all of the Mintos lenders. We highlight the lenders with the strongest features. We continue to be big fans of the Mintos platform, however we are allocating most of our capital to the highest rated lenders listed below.
It has been difficult up to now to compare each lender on the Mintos platform
Unfortunately, the information provided by Mintos about each lender is not consistent. Some lenders have not provided any information since March 2015. Others provide very regular updates. Information is provided in different currencies, languages and accounting policies. The quality of information provided varies enormously. Some information is audited, in many cases it isn't. There should be minimum standards of reporting and disclosure. At the moment, there does not appear to be any requirements at all.
Key financial information of each Mintos lender
The table below captures the key financial information for each lender. This can be useful to quickly lookup the profile of each lender, and compare the strengths and weaknesses of each one.
Mintos has not provided any recent useful or reliable data for the following 5 companies - Pangmaobao, Nord Lizings, Agrocredit, Acema, Mano Unija. We have had to exclude them from our analysis, but in the interim we would not purchase any loans from these lenders until proper disclosures had been provided.
All Figures in EUR million:
Our Mintos lender ratings
Our Mintos lender ratings are based on 5 characteristics - profitability, capitalisation, size, track record and the quality of their reporting. We have allocated marks out of 20 for each metric, giving a total score out of 100.
Top rated Mintos lenders
Mogo and ID Finance earned the equal highest scores. Mogo is a popular lender on Mintos as the loans are both secured by vehicles and most receive buyback guarantees. Mogo reported very good results in Q1 17 and appears to have a successful business model. ID Finance is another lender that is well capitalised and has produced strong results over the last 2 years.
We think investors can have some confidence in any lender achieving a score of 60 or better. Lenders meeting this benchmark include Credit Star, Capital Service, iute Credit, Banknote, Cream and IFN Extra Finance. We particularly like the quality and frequency of reporting by Credit Star and Capital Service, and allocate some capital to their loans.
Aasa recently released their 2016 results which showed impressive growth and a move into profitability, resulting in their score improving significantly and they are now well above our 60 score threshold. We have also recently upgraded the score of Banknote / Money Metro following strong results during 2017.
Lower rated lenders - our views
Of the lower rated lenders, Get Bucks, Kredito Garantas, Debifo and ITF Group were all included in our list of 9 lenders we would avoid right now.
Lendo is effectively a startup with no real trading history prior to 2016. It has been given a reasonable amount of equity to use to get to a breakeven profit level. One concern we have is that the business lost €1 million during 2016 due to FX differences between the Euro and the Georgian Lari. This suggests that their FX exposure has not been fully hedged, and the business could suffer if the Lari loses value against the Euro. This is something that Lendo should provide better disclosures about.
Hipocredit is a startup mortgage business. It used to be an affiliated company of Mintos, however it is now owned by new shareholders. During 2016 the previous owners of Hipocredit appear to have withdrawn €500k of equity, leaving it with only €135k. It's not clear why this was done. The business made a small profit in 2016. We cannot recommend purchasing Hipocredit loans currently, as they have recently been selectively buying back loans from Mintos investors (which they are allowed to do under the assignment agreement with Mintos investors). This has resulted in Hipocredit 'cherry picking' the best performing loans, and leaving behind investors with defaulted loans.
EuroOne joined the Mintos platform in November 2017. The business is extremely small, and has a history of losses, and as a result has a low rating.
Lenders receiving marks in the 40-59 range need to be treated with caution. Some of them are small but promising, and others have a few question marks over them. We would not allocate a large amount of capital to these lenders.