Mintos : European leader in crowdlending
Mintos, the famous crowdlending platform, is the first on which I naturally started to invest. It is indeed the undisputed leader in Europe in terms of financial volumes invested and therefore one of the strongest P2P marketplaces.
Let’s explore together whether this platform deserves its leading position. I invite you to form your own opinion on Mintos, an opinion that will help shape your strategy for financial independence.
Table of content
What is Mintos ?
The company AS Mintos Marketplace
Mintos is a Latvian FinTech company registered under the number 40103903643 with the official name ‘AS Mintos Marketplace’.
This crowdlending platform started its activities in 2015. After which the company experienced rapid growth due to a favourable institutional and economic environment.
But its rise was also thanks to its popularity with financial bloggers attracted by the platform’s ease of use and transparency.
The company has offices around the world : Mexico, United Kingdom, Estonia, Russia, Germany, Indonesia, Poland and, of course, Latvia.
The management team
The founders of Mintos are two Martins: Martins Sulte and Martins Valters, the Managing Director and Financial Director, respectively.
Martins Sulte studied economics and graduated as a financial analyst. Afterwards, he obtained an MBA. His career has been mainly in auditing, consulting and investment banking.
Martins Valters also has a background as an economist and financial analyst. He spent most of his career at Ernst & Young, where as a senior he met the young Martins Sulte.
The majority of their employees (about 160 in total) are listed on the Mintos LinkedIn page. This information is rather reassuring and improves the feeling of transparency. I myself am one of those who pay attention to this kind of information before deciding whether to invest in a platform or not.
Some figures for 2023
Here are some figures for the current year :
- Total amount of funds invested : €8,6B
- Total amount paid to investors : €217M
- Average annual return : 7.8%
- Number of investors : 500, 000+
- Average portfolio per investor : €2,400
Overall, Mintos has suffered a serious slowdown in recent months with the average portfolio per investor halved and monthly volume down sharply compared to previous years.
Mintos still funds an average of €50M in loans each month, which puts the platform far ahead of others from that perspective (but only that one…).
The total money invested so far is over 8 billion euros. This is an impressive figure for such a young platform. There is no doubt that it is currently the largest P2P lending player in Europe. There are serious competitors, but none of them offer such a financial base.
How does Mintos work ?
Mintos is a marketplace
Mintos works in a fairly standard way compared to other crowdlending platforms. On its marketplace, Mintos bring together private investors (like you and me) and lending companies.
The lending companies offer different types of loans to both individuals and companies. In this way, they finance their projects while being remunerated according to the capital lent.
In this process, the loan originators may call on private investors to help them finance their activities. In this way, the investments raised increase the total amount of funds lent.
It is these lending companies that allow the Mintos platform to have such a large loan portfolio. This is how Mintos ensures such significant liquidity in its market.
No other platform in Europe currently comes close to the number of lending companies Mintos works with (over 60).
Thus, thanks to these lending companies, Mintos allows investors to diversify their investments across multiple countries, different types of loans and even different currencies.
Role of the lending companies
When one of these lending companies offers a loan on the Mintos crowdlending platform, this loan has already been granted to the borrower.
By offering investors the opportunity to co-finance this loan, the company charges a small percentage as an intermediary. But on top of that, it can reallocate its capital to other borrowers.
And repeat the process…
In this way, the lending company gets paid both as a financial intermediary and as a credit institution.
Nevertheless, Mintos requires that each lending company keep some skin in the game through a minimum percentage of investment in each loan.
In addition, these lending companies usually offer a buyback guarantee. Thus, if a borrower defaults, the lending company buys back the defaulted loan from the investor and some also pay the interest that the investor should have received.
Chronology of a P2P investment
To put it simply, it is possible to invest on Mintos starting from €1. As for the annual returns, they fluctuate in a range that can turn out to be very wide (between 6% and 21%).
This can give nice returns. For example, here is my passive income generated on Mintos, which is based on the rates but also on my investment policy on the platform :
The peak corresponds to my activity on the secondary market during the Covid crisis. And the downward trend can be explained by the fact that I reallocated my investments to the Robocash Group’s platform and the PeerBerry P2P marketplace.
From my perspective as an investor, here is the investment process :
1Lending companies offer their loans on Mintos to find co-financers for their operations
2I invest in these loans, thus providing additional funding to the lending companies
3Borrowers repay their loans (principal + interest) in instalments, usually monthly
4I receive a portion of the interest at the same time as the partial repayment of my capital
5I can either collect the money from my bank account or reinvest it in Mintos
So you can see that the process is quite simple as it involves lending small amounts of money on a dedicated marketplace.
Investing on Mintos
Who can invest on Mintos ?
Individuals over 18 years old and legal entities can invest on Mintos, provided that they have a bank account in the European Union. Mintos carries out an identity verification beforehand.
However, regardless of your nationality, if you are a UK resident or taxpayer you will not be able to invest on Mintos.
Finally, you should know that the main countries for investment on Mintos are : Germany, Poland, the Netherlands, Spain and the Scandinavian countries (Denmark, Norway and Sweden).
What can you invest in on Mintos ?
On Mintos, investors have a relatively wide choice of investment types. They can invest their funds in different types of loans :
- Car purchases
- Invoice financing
- Business loans
- Short-term loans
- Personal loans
- Agricultural loans
It is of course possible to limit investments to specific types when setting up the automated investment.
Where can you invest with Mintos ?
In your opinion, where it is wise for you to invest on Mintos must obviously take into account a good diversification of your portfolio.
On this point, don’t worry, since the Mintos crowdlending platform offers you the choice of investing in 33 countries around the world and in 12 different currencies..
Investors can therefore spread their investments across different regions and reduce their dependence on the economic performance of any one country.
It is also possible to add a layer of diversification by investing in loans denominated in other currencies. But in my humble opinion, this type of diversification, which involves exchange rate risks, is not useful.
For example, here is an article on Sterling, who has invested more than €1M on the Mintos platform.
How do you invest on Mintos ?
On the Mintos crowdlending platform, new loans offered by lending companies are listed on the primary market. This is where all newly arrived loan opportunities are grouped together.
But there is another marketplace where loans are offered for sale by other investors : the secondary market.
Most platforms have such a market, except for the younger (and therefore smaller) ones, such as Lendermarket, for which it is not necessarily useful.
Thus, it is possible to invest through the secondary market where loans may be at a premium or discount, depending on what the seller decides.
A similar premium/discount system can be found on Iuvo as well, but it remains rare in crowdlending.
Furthermore, resale on this parallel market is not free of charge, as Mintos asks for a 0.85% commission on the sale price (payable by the seller). But most platforms (e.g. Swaper) do not charge any commission.
The Mintos registration process is simple. It only took me a few minutes to sign up and Mintos guides us through the process relatively well.
As with other crowdlending platforms, they also verify your identity before you can deposit money.
To create an account on Mintos, the eligibility criteria are :
- Be over 18 years old
- Reside in a country where they operate
- Not be a resident of the UK *
Depositing money is simple and Mintos accepts transfers using (Transfer)Wise.
* Licensing to operate in the UK is in progress
Mintos : Investment strategies
It is possible to use investment strategies predefined by the platform itself or to build up self-investment portfolios yourself.
All these strategies are automated, but for the first 3, it is Mintos that decides on the allocation of your portfolio, while in the 4th it is the investor.
Mintos : diversified strategy
Our funds are potentially invested among all listed lending companies with priority given to diversification. Keep in mind that Mintos does not refrain from investing in loans without a buyback guarantee.
I would never invest in this strategy as Mintos chooses companies with a Mintos Risk Score ranging from 2 to 10, which is totally unbelievable given the average expected return of 8.63% (we were at 12.25% last year on this strategy…).
Mintos : conservative strategy
Here, Mintos offers us investment in lending companies with a Mintos Risk Score between 7 and 10, and in companies for which 80% of their portfolio is not in default. In addition, the selected loans are all with a buyback guarantee.
This strategy is already a little more acceptable, particularly given the expected return of 8.08%, which is very close to that of the diversified strategy. For the record, the rate offered last year was 9.24%.
Mintos : high-yield strategy
The stated objective of this strategy is to achieve the best possible returns. But this strategy implies, like the diversified strategy, investing in companies with a Mintos Risk Score between 2 and 10. There is also a 60% focus on lending companies that offer the highest returns.
Admittedly, this is a strategy that prioritises the highest possible returns, bearing in mind that these are not as high as they used to be on Mintos. The average expected rate for this strategy has fallen from 12.60% to 10.74% in one year. Nevertheless, it should be noted that all loans are selected with a buyback guarantee.
Mintos : tailor-made strategy
This strategy is specific to each investor, who implements it according to the criteria they have defined. In order to do this, the investor should first answer a number of questions, such as :
- How long should I invest ?
- What level of liquidity should be targeted ?
- What return on investment is expected ?
From there, each investor will define the eligibility criteria for the loans they wish to invest in, including the type of loans, the duration of the loans, the expected return, etc.
If this strategy is set up correctly, you are in a crisis period (yes yes) and you are active on Mintos, then you might be able to beat my record (if so, I’ll invite you to a restaurant) :
It should be noted that it is possible to establish several tailor-made strategies, whether on the primary or secondary market.
Is it risky to invest on Mintos ?
Mintos : a regulated platform
Eventually, Mintos will no longer offer loans but ‘Notes’, each of which contains between 6 and 20 underlying loans. Notes are regulated financial instruments that have their own International Standard Serial Number (ISSN).
Once the notes are issued, investors on Mintos are protected by the general MiFID II investor protection framework, by the PRIIPs (Packaged retail investment and insurance products) and, most importantly, by Regulation 2017/1129 of the European Parliament and of the Council of 14 June 2017 on prospectuses.
Mintos has therefore developed a generic prospectus architecture that details a set of basic information relating to the activities of lending companies listed on Mintos :
- Business case
- Lending portfolio and statistics
- Underlying assets that ensure proceeds
- Peculiarities and legal environment in the relevant jurisdiction
- Legal and contractual covenants between involved parties
In addition, investors are protected by a national investor compensation scheme which is established in accordance with the requirements of European Directive 97/9/EC. If Mintos fails in the service it provides to the investor, the latter will be entitled to compensation for 90% of the resulting irrevocable loss, up to a maximum of €20K.
But we are talking about covering funds NOT invested !
Indeed, the investor compensation scheme does not compensate investors for losses resulting from :
- Changes in the price of an investment
- The default of a borrower, a lending company or an issuer
- The absence of a market for buying or selling an investment
So clearly, the Latvian IBF (Investment Brokerage Licence) rather guarantees the sustainability of Mintos..
But the investment community was not concerned about this but more with regard to the lending companies, among which some have defaulted. In the end, nothing has changed.
Mintos Risk Score
To help investors in their decision making, Mintos has introduced the Mintos Risk Score, which is its rating scale for lending companies.
The objective is to evaluate the lending companies listed on their platform based on 4 criteria rated from 1 to 10. Each of these criteria is weighted by a percentage, which gives an overall score for each lending company.
1. The performance of the loan portfolio (40%)
Here, Mintos tries to assess the quality of the loans offered by the lending company on its platform. To do this, their team compares the ratio of non-performing loans, the annual interest rate of the loans and their term with the direct operational costs associated with the portfolio.
Then they look at some indicators related to the health of the portfolio as well as the historical performance of the loans.
The scores range from 3 (e-cash, Pinjam Yuk, Creamfinance Spain, etc.) to 9 (AgroCredit, Mikro Kapital, Placet Group, etc.).
2. The efficiency of the lending company (25%)
With this sub-score, we are offered an analysis of the financial performance of the company. But Mintos also looks at the experience of the management team as well as the loan underwriting and debt collection processes, including their automation.
The ratings range from 4 (Stikcredit) to 9 (AgroCredit, Credius, Delphin Group, etc.).
3. The strength of the buyback guarantee (25%)
This sub-score assesses the debtor’s ability to meet its contractual obligations and the liquidity needs of its market place.
Mintos calculates this sub-score based on :
- Financial profile, performance and projections
- Management experience
- Regulatory and legal business environment
- Diversification of revenue sources
- Diversification of geographical areas
4. The cooperation structure (10%)
This score assesses the legal configuration between Mintos on the one hand and the lending company on the other. In other words, the focus is on the control exercised by Mintos over the cash flows of the loan company’s borrowers.
For example, if the platform has direct control over these flows, in the event of default by the lending company, it could transfer the borrowers’ claims to another company.
The scores range from 3 (Stikcredit, Dineo, Cashcredit, etc.) to a maximum of 6 (Mogo, Mikro Kapital, Delphin Group, etc.).
Mintos Risk Score Review
The Mintos Risk Score is updated quarterly, based on the results of their financial monitoring process, the quality of the loan portfolio, the management history, the state of the business environment, etc.
Overall, this new rating system introduced in 2020 is more detailed and transparent than the previous one implemented in 2018. It thus allows investors to position themselves on lending companies in a more thoughtful way by being better informed.
However, some grey areas remain, especially regarding the way in which each sub-score is evaluated. Indeed, Mintos does not give any explanation on the score that has been attributed, which is a pity. This would allow investors to make up their own mind.
The same applies to the reasons behind the weighting of scores (40%, 25%, 25%, 10%), a principle established by the platform without explaining the mechanism for allocating the percentages.
My opinion on Mintos
In my humble opinion, there are a number of things that Mintos should work on in order to remain a relevant player in the crowdlending industry.
(Really) check the lending companies
Mintos will remember the health and economic crisis of 2020 as an ‘annus horribilis’ (#Queen of England). Of the 120 companies listed on its platform, 39 are now in default or suspended.
That represents 1 in 3 companies.
This is huge !
A real crisis of confidence has hit the relationship between investors and the platform, which had been rather good until now. Many have left Mintos for other more favourable climes (Read : Analysis and opinion on PeerBerry).
The fault lies with the Mintos management team, which for a long time was satisfied with the Relationship Manager with the lending companies, Janis Pranevics. One has to wonder what his role has been since he joined in 2016.
Mintos seems to have reacted by hiring a Risk Manager from the banking sector, Karlis Kronbergs (too late, some would say). We’d bet that this can only improve the financial transparency of Mintos’ partner companies.
Improve their financial situation
The last time Mintos made a profit… sorry ! The last time Mintos did not make a loss was in 2017, a year when the profit was zero on a turnover of €2.1M. Since then, although their turnover has increased, it has grown less quickly than their losses, which have tripled or doubled every year (2019, 2020).
This is a relatively uncomfortable situation given that Mintos has increased its operational costs in 2020 by now taking 0.85% on secondary market trades. Their management would do well to look at the exploding human resources, which are still far from the expected level of expertise.
At the same time, we can try to reassure ourselves following the crowdfunding campaign that enabled Mintos to raise €7.2M from its community of investors. Knowing that the platform also wants to attract venture capital to help its growth.
These investments have already enabled Mintos to acquire certain licences in Lithuania (investment company, electronic currencies). But the idea is also to be able to offer new products (ETFs) and services (IBAN account, debit card).
Raise interest rates
Before the Covid crisis, some lending companies on Mintos were offering mind-blowing loans of up to 21%. But unfortunately, for many, these companies were the ones that failed.
Now, when an investor wants to invest in solid companies, it is really difficult to exceed 10% return. Whereas other platforms easily climb to 11% or even 12% and sometimes more (I’m thinking of Swaper which is at 14%).
It would be good if the Mintos teams would stop partying and get down to work…
Resolving conflicts of interest
There have long been doubts about the relationship of the owners of Mintos with some of the lending companies listed on the platform. Indeed, the owner and ultimate beneficiary of Mintos is in fact Aigars Kesenfelds, who is also the true beneficiary of 81 Latvian companies.
In particular, this businessman is the real beneficiary of several real estate companies, AS Skanstes Biroju Centers and SIA Mintos Finance. Kesenfelds’ interests in these companies are represented by AS ALPS Investments, Dyonne Trading & Investments Limited, based in Malta, and others.
For more information on Aigars Kesenfelds, I recommend this comprehensive article.
Aigars is not explicitly mentioned on the platform, but since its name is associated with lending companies (Mogo, Hipocredit, Lendo and others), Mintos should clarify the situation as many people are concerned about the conflicts of interest that could arise.
Improve automated investment
When investors have defined the parameters of their portfolio, they have no other choice than the ‘Save & Activate’ button.
What is the point of combining them ??
All the other platforms allow you to create the portfolio first and then to activate it. I can’t count the number of investors who have complained that their portfolio has been invested ‘without their agreement’.
Another point of improvement is to create a single portfolio positioned on both the primary and secondary markets. Having to create a portfolio for each market is time consuming and makes the whole investment process more complex.
Alternatives to Mintos ?
Mintos is very far from having guaranteed the interests of its members by integrating fragile loan companies from all over the world. This is why I am gradually leaving this platform.
Other P2P marketplaces have shown more professionalism, led by the very popular Robocash and PeerBerry.
In addition, yields on Mintos have fallen drastically, while other platforms offer rates sometimes twice as high, up to 16%. I am thinking in particular of Swaper, Lendermarket and Esketit.
And if you’re worried that you won’t find any other platforms than Mintos to invest in foreign currencies, just head to Iuvo.
It is clear that Mintos is THE leader in Europe in crowdlending with almost €7 billion of loans financed on its platform. This makes it a major player in the world. As a result, Mintos is firmly established in the P2P investment landscape.
However, if you look at the company as such, it is simply a large SME with a yearly turnover of (only) €10M.
That’s great ! But it’s not at such a level that the company can believe it is untouchable.
I am also concerned about one point.
It’s a very simple calculation that shows roughly whether a company is profitable: you have to divide the turnover by the number of employees, i.e. €10.2M/161 = €63K. In a consulting company, for example, it starts to generate profits on an employee from €100K.
Let’s say that at this level, Mintos can barely pay its employees.
I therefore expect Mintos to quickly ramp up the new services it wishes to provide. I would also like it to train its employees a little better, as they show very little knowledge of crowdlending, especially in terms of support.
For now, I prefer to stop investing in Mintos and place my capital where there is less risk and higher levels of return.
In your opinion, is Mintos a platform that can be considered reliable ?
Have you already started investing ?
I would be happy to know your feelings on this platform, a contested leader in Europe that often stirs up passions between those who love it and those who leave it.
Please leave your questions on the platform below and I will be happy to answer them.
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