A P2P edition: a troubled Capital Match and Funding Societies’ Vietnam push

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Hello there,

In the fragmented online lending market, one firm’s downfall is another’s gain.

This week, we investigated investor allegations against Capital Match, a Singapore-based P2P firm that specializes in invoice financing.

The P2P lending sector is no stranger to controversy, and Capital Match isn’t the first firm to go south. It also definitely won’t be the last.

In recent times, you’d recall CoAssets’ fall from grace, a story Tech in Asia broke in December 2020. And just last week, we covered the plight of Indonesia-based UangTeman’s investors and their futile efforts to claw back their money since early 2021.

P2P firms – at least in their most traditional sense – aren’t set up to be aligned with the investors they represent and the deals they enable. Unlike balance sheet lenders, many P2P firms do not have skin in the game – they purely provide a platform for lenders to connect with borrowers.

When loans go bad, it’s the lenders who risk losing their capital, while P2P firms risk losing only interest on repayments. There’s also limited incentive for platforms to take an active role in loan recovery and maintain the credit quality of the assets they’re taking on.

That said, to players serious about the long haul, having a good reputation matters. That means delivering on projected investment returns and keeping non-performing and default rates to a minimum, without compromising on credit quality even as loan books grow.

But not all is bad. Several online lending platforms are going from strength to strength even as they emerge from what’s hopefully the worst of the pandemic.

We examine one of them – Funding Societies and its US$144 million-backed push into Vietnam – in this week’s Hot Take.

— Melissa

THE BIG STORY
Another P2P lender goes south: millions on the line for Capital Match’s investors

Image credit: Timmy Loen