Earlier this month, MonJa attended the IMN Investor’s Conference on Marketplace Lending, AltFi Global Summit, and American Banker’s Marketplace Lending and Investing in New York. For those who were not able to attend, we present an overview of common themes and challenges that were discussed among issuers, service providers, banks, and investors. We also give a quick recap of some of the interesting topics during each conference.
IMN MARKETPLACE LENDING CONFERENCE – OCTOBER 29
With over 450 attendees, the IMN’s Marketplace Lending Conference was the largest conference. It featured a good range of players from different segments of the industry and an excellent list of speakers. Kicking off the conference, Ron Suber of Prosper Loans gave a keynote speech on the rise of marketplace lending, as well as a kind shoutout to MonJa.
Suber mapped the current existing structures (fractional/whole loans, LP/LLC/BDC) to the rise of securitization and potential structures (UK Investment trust, US closed-end fund, trust certificate, and a platform’s closed-end fund).
Following the keynote were discussions on the overview of marketplace lending, regulations in the US, the development of securitization, diagnostic checks for investors, technology and data requirements, and the rating selection processes for determining credit. Overall the conference did an outstanding job in giving investors a collection of opinions on the opportunities, obstacles, and emerging trends in marketplace lending. Two topics that I found interesting were the development of securitization and lack of standardization across platforms. Popular questions include:
- Are investors going to pay for standardization?
- Should securitization come from a third party aggregator vs from the platform?
According to David Mandel of Citi, “Among originators, there are different asset types. Some platforms are buy to sell, buy to hold, and hybrid of the two. So when you look at the securitization, it’s going to be an analysis of a) the platform b) who the sponsors of the securitization is whether it’s the marketplace lender or the aggregator. Each individual investor will have to be comfortable with the platform’s underwriting, what the performances are going to be, and the risk-adjusted returns. The aggregator has to do a good job of explaining to the agencies and getting that through the process or if they are just buying a pro-rata slice and selling that to the investor, and making sure the investors understand what the risk-adjusted returns are.”
ALTFI GLOBAL SUMMIT – NOVEMBER 2
The next week, MonJa attended the AltFi Global Summit, which was largely sponsored by MW Eaglewood. AltFi was a cozier conference, which made it a great opportunity to meet major investors, platforms, and service providers driving the industry. One interesting debate was between Matt Burton of Orchard Platform and Stuart Law of Assetz Capital on ‘How will majority of investors access alternative finance products in years to come-direct or indirect?’ Matt believes that the “indirect channel is part of the funding equation,” and advocates that there is a huge growth for “origination platforms to go to indirect sources to auction it off with the secondary market.” Representing the UK was Stuart, who stood on the direct side. The debate concluded that it depends on which direction the platform takes and the regulatory environment of the country. For a thorough recap of their conference, check out AltFi’s 2015 Global Summit Review.
AMERICAN BANKER’S MARKETPLACE LENDING + INVESTING – NOVEMBER 4-5
Last but not least, MonJa attended The American Banker Conference on Marketplace Lending and Investing, which covered topics on emerging trends, risk management techniques, the new regulations for the industry, and offered workshops for investors and banks to ensure that they own a rigorous process when deciding which platforms to partner with. For investors looking into this space, the “Generating Yield” track offered best practices and methods of evaluation from marketplace lending experts.
In the “Diagnostic Checks for Investors” discussion, Brian Weinstein of Blue Elephant Capital, Michael Whalen of Goodwin Proctor, and MonJa’s CEO James Wu presented topics that investors need to consider when investing, such as proper due diligence for platform selection, analytics to monitor losses, and procedures to mitigate risk when regulatory issues such as Madden v. Midland arises. For a full view of our presentation, go here: MarketPlace – MonJa BlueElephant Goodwin Proctor panel.