Hong Kong fund raises HK$200m in loans for crowd funding platform MoneySQ
An asset management firm has raised HK$200 million from professional investors to be used as loans through Hong Kong’s first peer-to-peer crowd funding lender MoneySQ.com.
The Bridgeway Prime Fund raised the sum over three months from professional investors to lend through MoneySQ.com, as current regulations prevent other individuals from taking part in peer-to-peer lending.
Earlier this year, a report by the Hong Kong government’s Steering Group on Financial Technologies said peer-to-peer lending and equity crowd funding targeting professional investors “may benefit from certain exemptions”.
“Most of the [investors] we have contacted are still taking a wait and see approach. They want to see if this works out, they want to see if this is legal,” said Bridgeway founder Edwin Lee. “They want to see the result from MoneySQ or other platforms to see if the borrowers really do pay it back.”
Lee said the Securities and Futures Commission asked MoneySQ.com to change its description from a peer-to-peer lender because it did not facilitate loans directly between individual investors and individual borrowers. Instead, the company opted for the crowd funding description as it lends indirectly from a pool of funds.
Crowd funding and peer-to-peer lending in Hong Kong fall under the Securities and Futures Ordinance as well as the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
Trust in peer-to-peer lending was hit after some of them, including the high profile Ezubao in mainland China, turned out to be alleged Ponzi schemes.
The professional investors that Bridgeway works with are defined as individuals with HK$8 million in liquid assets or a partnership, trust or corporate body with a portfolio worth more than this amount.
Less than 100 individuals invested in the fund, each putting in at least HK$1 million, for returns promised at 5.5 per cent for a one-year term. Lee said investors included retirees, those with large property portfolios, family offices and companies.
MoneySQ.com, founded by Lee’s brother Steven, will lend the money raised to borrowers starting from July. The company holds a money lending license.
The loans will range from HK$5,000 to HK$100,000 at interest rates of between 6 and 15 per cent, targeting predominantly younger borrowers who are comfortable in the online world.
The online lender has partnered with credit information firm TransUnion to use the company’s credit rating tools. MoneySQ.com will only lend to low risk borrowers, Steven Lee said.
He added that since the announcement of the partnership with Bridgeway in March, no other lenders have announced similar plans.
“Many money lenders are interested in this [type of] platform but if you go to the SFC you only have a money lender’s license. They’ll ask if you have asset management experience,” he said. “But if an asset management company wants to get a license, they’ll ask if you have money lending experience.”