PeerBerry Review

My opinion on PeerBerry

It has to be said that PeerBerry, although a young platform that appeared in 2017, is becoming one of the leaders in the P2P lending sector.

This company has been able to bring together a large number of players, since it now has 31 loan originators and several tens of thousands of investors who already trust it.

No wonder, then, that PeerBerry was already making a profit when it was founded, and has continued to do so in the years since. Just look at its 2019, 2020, 2021 and 2022 business reports..

It is also worth noting that the volume of loans to date is in the upper middle range of P2P players, as PeerBerry is ranked in the top 3. . It must be said that the platform has been well helped by Aventus Group, which started its lending activity more than 10 years ago.

Finally, PeerBerry offers real geographical diversification with no less than 14 countries represented.

Nevertheless, the platform still has some room for improvement.

Neither secondary market nor reserve fund

Most of the serious competitors in the P2P market offer a secondary market (though sometimes with a commission to pay).

This type of market improves the liquidity of the platform by allowing investors to exit earlier than expected. As a corollary, a secondary market increases the number of loans available on the platform to those who wish to invest.

PeerBerry argues that they do not need a secondary market because the vast majority of their loans are very short term (about one month).

They are not wrong in this respect, as this characteristic ensures good liquidity for the investors who wish to buy or sell.

Regarding the lack of a reserve fund, PeerBerry is in line with a large proportion of platforms that do not generally use one. PeerBerry gives a good excuse, which is the group guarantee by the parent group (Aventus or Gofingo) in case of default.

Financial information about loan originators

As mentioned above, PeerBerry collaborates with two large financial groups, Gofingo and Aventus Group, as well as with three smaller lenders, Lithome, SIBgroup and Litelektra. In total, investors can put their funds into loans from 27 loan originators.

Until recently, there was very little information about these loan originators. But the crisis of 2020 has brought more transparency.

Investors now have access to the size of their loan portfolio, the total amount of loans financed, their geographical location, their date of creation and their size in number of employees, as well as information on the buyback guarantee and interest rates.

This new information has increased investor confidence in the platform.

Furthermore, I think it would be interesting for PeerBerry to develop its own rating system one day, as others have done (See Mintos : Review and Analysis).

I understand that platforms working only with one loan originator do not do this (See my review on Lendermarket). But with 27 loan originators, I think it’s important that PeerBerry get on board.

PeerBerry has some interesting reasons for not doing this. Indeed, their team points out that despite good ratings on other P2P platforms, some loan originators did not fare well in the Covid19 crisis.

PeerBerry argues that their concept is different as their management prefers to ‘keep control’ on the performance of each loan originator based on their financial reports.

On the other hand, PeerBerry sends this work to the Latvian regulator, which applies a rating model including 23 criteria to the loan originators listed on their platform. The result of this rating shows that these companies present a low or moderate risk.

No Skin in the game” 

The PeerBerry P2P platform does not require its loan originators to keep any skin in the game, unlike platforms like Mintos and Iuvo Group.

Arunas Lekavicius, the CEO, mentions the fact that the group guarantee exists, that the financial statements of the loan originators are verified every 6 months and that his team also carries out internal processes to review their portfolio every month.

I would add that the 45% debt ceiling acts as a kind of skin in the game ( see also my analysis of Robocash).

Reservations about the group guarantee

Although the group guarantee is a last resort and has never been used so far, it is possible to express some reservations.

First of all, it should be noted that ‘Aventus Group’ is in fact simply a trade mark. The company behind the group is ‘Aventus Capital’.

Secondly, a central point needs to be explained : ‘Aventus Capital’ is not a holding company for the various loan originators listed on PeerBerry. Consequently, these companies are not subsidiaries of the Aventus Group, nor is it their parent company.

As a result, a number of investors have expressed reservations about the validity of the group guarantee and about the entity that ultimately guarantees the loans on behalf of this group guarantee.

In fact, the loan originators operating under the brands ‘Aventus Group’ and ‘Gofingo Group’ have signed cross-guarantee agreements with each other. With these agreements, all companies act as guarantors for each other.

If one of the companies encounters sufficiently serious financial difficulties to request the mobilisation of the group guarantee, then it is up to the ‘management’, consisting of the shareholders and directors of the companies, to determine to what extent each will contribute to the debt.

This is what PeerBerry has explained on its website : What does the additional group guarantee mean and how does it work ?

So, it is true that this group guarantee is a plus in risk management. But now that it has been put forward by PeerBerry, some questions arise as to its practical implementation :

• Is the involvement of shareholders in management legally valid ?
• How will this management determine in practice the contribution of each company ?
• In the event of a default by one of the companies, who should investors turn to ?

Finally, it should be noted that these agreements are not public, but their existence is simply attested by a memorandum.

For my part, I don’t find this legal arrangement established by lawyers to be a real problem. It is a plus to have this guarantee compared to other platforms that do not offer it.

Moreover, the regulator is not at all interested in the group guarantee. It is more focused on the financial performance of the loan originators and on the fight against money laundering.

The fight against money laundering is one of the most important steps in the whole regulatory process, as it involves borrowers, PeerBerry’s business partners and investors.

To conclude, let’s say that it is better to see this group guarantee as a public commitment of these different companies to help each other in case of a hard blow by using all available resources. But let’s keep in mind that this is indeed not a legal obligation.