Aventus Group is the largest business partner of PeerBerry – an alternative investment platform. According to April 2020 P2P market statistics, PeerBerry maintained a very strong position in the P2P market compared to competitors. In terms of loans funded in April PeerBerry firmly ranks № 2 among other P2P platforms in continental Europe.
Evaluating the feedback from investors communities, since the beginning of Covid-19-related developments, PeerBerry is probably the only P2P platform in the European market that, during this economic downturn, makes payments to its investors timely – straight after the request, without any delay.
The smooth process of P2P platform operations is only possible when its business partners – loan originators are ready to face challenges and overcome them. It seems that the most difficult phase of the crisis has already passed, and the consequences of it can already be assessed. Last month’s and current results show that PeerBerry and its partners – loan originators – were perhaps best prepared to face the unexpected crisis.
Andrejus Trofimovas, CEO of Aventus Group, answers investors’ questions on how it is possible that PeerBerry operations remain very smooth when many other market players are experiencing quite another reality.
It is very likely that investors during March and April withdrew a significant part of the investments that Aventus Group companies had to return to investors. How has this affected the financial situation of the Aventus Group?
Andrejus Trofimovas: This is not the first crisis in my professional life, so I know very well that most often, a crisis hit suddenly; therefore, it is necessary to prepare for it in advance by forming a certain reserve even when we don’t feel a smell of the crisis. In addition to very responsible risk management and an experienced team, what I believe are essential components of the business, there were a few very important things we did all the time, and it helped a lot in facing this crisis. First, even during the growth of the market, we formed a financial reserve of at least 10%, which we gradually increased by feeling the first signs of the crisis. Second, Aventus Group companies have never borrowed more than 41% of the net loan portfolio via P2P.
As a result, Aventus Group was well prepared by the time quarantine began. According to some indications, we assumed some possible turbulence in the financial market; therefore, by the beginning of the crisis, we had sufficient free balances on our accounts, and a debt-to-equity rate was about 60% which, in my opinion, is one of the healthiest indicators on the market. When quarantine began, we were absolutely sure that our only priority entire Aventus Group is to pay in time to our investors, who, at this difficult time, will need to return their investments.
Setting the needs of investors in the first place, we immediately decided to reduce lending to new clients in our main markets. This made it possible very quickly to raise funds necessary for settlements with investors. We also noticed that, oddly enough, in many markets, our regular clients began to apply for loans less often, apparently fearing possible problems with repayments.
Preventively, we reduced lending for new clients due to a potentially larger default. It also helped us to accumulate the necessary funds. As a result of these actions, in March and April, the volumes of lending within Aventus Group decreased markedly, but we already see that most markets have begun to stabilize, and it is very easy to return the lost volumes in the coming months.
Currently, Aventus Group has reduced its debt on Peerberry from 19,5 million Eur on the 15th of March to 11,4 million Eur on the 20th of May. The debt-to-equity ratio has become 44%.
Investors note that many loan originators who work with other platforms suffer losses due to currency fluctuations in different markets. How does the Aventus Group manage the risk of currency fluctuations?
Andrejus Trofimovas: The exchange rates of the main currencies in countries where Aventus Group operates were declining by approx. 10%-15%, so this had not a critical impact on our profitability. In countries such as Kazakhstan, where currency fluctuations have been more significant, issued loans by our companies make approx. 14% of the total Group’s loan portfolio. Thus, currency fluctuations are not critical for us.
As markets gradually recover, what changes do you plan for when your businesses reach pre-crisis conditions?
Andrejus Trofimovas: Currently, more than 7.5 million Eur are accumulated in the company’s accounts, which we plan to use for further coverage of the debt to PeerBerry or to increase lending volumes. It is very natural that as the markets return to normal conditions, interest rates on loans will decrease. In other words, it will return to pre-crisis levels.
Therefore, I want to invite PeerBerry investors to invest in Aventus Group loans now, until it is still a great time to earn higher interest rates, as I assume interests will decrease very soon.
How do you think the business geography of the Aventus Group will change after this crisis? Maybe you already see some signs which indicate to exit some markets or enter new markets?
Andrejus Trofimovas: Due to recent developments, we had to postpone the opening of new companies till the end of this year. Now we will pay all our attention to the development of existing and efficiently operating companies. In the near future, we plan to offer PeerBerry investors to invest in loans issued in Asian countries.
What lessons has this crisis brought to the Aventus Group and you, as the CEO of such a large business, personally?
Andrejus Trofimovas: I am a part of the Aventus Group business, and Aventus Group is a part of me. This crisis has shown me once again that I am in the right place and with the very right people, speaking about my team.
It so happened that just before the quarantine, while being at the airport with my wife and children after vocations, I had to decide in which direction to fly quickly – whether I’m flying with my family to spend some time together or I’m flying to work with another plane. At that time, we did not believe that the next day already, the borders will be closed, and we will be separated for a long time. Although I miss my family very much, I know they understand me being with the team in the most challenging time.
During this quarantine time, together with the Aventus Group team, we mobilized our forces for a different reality, successfully completed the most difficult stage of the crisis, we have maintained the confidence of our investors in us by making timely payments and, what is very important, saved all jobs. We know that many other participants in the financial market had to reduce their teams. From mid of March till now, our team has even increased from 790 to more than 850 employees. Even more, Aventus Group paid all before crisis agreed bonuses to employees, as our team showed absolutely amazing performance during these turbulent times. In addition, we did not decrease Aventus Group team salaries, as we believe – our team is our biggest asset and our future.