Validus Capital, an SME lending platform, has announced it will be the first platform in Singapore to provide investor protection for their invoice financing loans in a partnership with insurance provider EQ Insurance.
Formed back in 2015 by Richard Hoon, Yash Poddar, and Vikas Nahata, Validus lends to "quality" SME borrowers to add firepower to invoice financing as well as working capital requirements.
Economic growth in Singapore has been strong in the first half of 2016 but the trade-dependent nation is vulnerable to swings in international demand. The business loan market meanwhile is also booming in Singapore, reaching $357bn in 2015, according to data released by Monetary Authority of Singapore. Over the same time-period, the global p2p lending market was valued at $26.16bn, according to Transparency Market Research
Validus has had a zero per cent default rate since it launched, coupled with a greater than 18 percent annualised return to investors, a spokesman for the firm said. However, it should be noted that its track record is relatively short.
Validus uses what they term as a “rigorous 80-point due diligence and risk assessment process”, backed by data from the Singapore Commercial Credit Bureau as well as the Credit Research Institute.
The latter guides Validus’ Probability Default rate for SME's. The CRI is a not-for-profit enterprise with the social goal of making credit ratings a ‘public good’, away from the current ‘for-profit’ model.
Validus Capital provides a borrowing pool to growth-oriented SMEs while EQ Insurance adds blanket cover across all invoice financing loans.
Richard Hoon, chairperson of Validus Capital said: “We recognise the quality and importance of Singapore’s SMEs, as our platform supports their continued growth. As the industry matures, our partnership with EQ Insurance will give greater confidence, to investors and borrowers alike, in the capability and stability of our platform.”
Validus have provided an average loan of $200k with a tenure of six months. Sixty-one percent of loans are to borrowers with a Dun & Bradstreet credit risk grade of less than or equal to 3, indicating a "fair" rating.
Ronald Cheng, chief exective officer of of EQ Insurance said: “We commend the stringent risk assessment process undertaken by Validus Capital in approving the SMEs on-boarding their platform. Our partnership will not only provide investors with greater reassurance but will also present great opportunities for those SMEs in these tightened economic times".