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Post by pepperpot on Aug 3, 2015 12:00:38 GMT
Would it be feasible/advantageous for MT to take a charge on assets held within Cash Shop to reduce the leg work required in the MPs?
My thought is CS is basically getting a funding line secured on the pawned assets it holds, could a floating charge be implemented up to 50% of the value of the current 'stock' and might it allow amalgamation of the MPs into one facility? Or at least one facility per outlet.
Or do people prefer the direct 'charges' on individual/grouped items?
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Post by MoneyThing on Aug 3, 2015 12:21:43 GMT
Would it be feasible/advantageous for MT to take a charge on assets held within Cash Shop to reduce the leg work required in the MPs? My thought is CS is basically getting a funding line secured on the pawned assets it holds, could a floating charge be implemented up to 50% of the value of the current 'stock' and might it allow amalgamation of the MPs into one facility? Or at least one facility per outlet. Or do people prefer the direct 'charges' on individual/grouped items? Afternoon pepperpot, In early discussions, we did talk about using a debenture mechanism with a floating charge on their assets (loan book), however we decided that it would be better to proceed on a tranche by tranche basis. This was to allow Cash Shop to draw down funds as and when required (for cash flow & expansion purposes), but also to allow investors to see a snapshot of the original group of loans contained within the batches/MPs. In addition, Cash Shop have a number of revenue streams and also assets that are not part of the pawn loans & buy back agreements. Lastly, whilst there is more work involved, the current approach allows both ourselves & Cash Shop to keep a close track of the total borrowing on a regular basis by seeing exactly which assets have been assigned over to MT at any time to make up the total. Kind regards, Ed
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Post by bracknellboy on Aug 3, 2015 13:58:36 GMT
MoneyThing: on that note, since I don't think it is easy to ascertain directly from the loan book, what is now the total aggregate CS exposure ? [And BTW, as commented by someone else, enabling .xls/.csv download of items such as transaction statements, personal loan book, total platform loan book would be a good thing].
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Post by bracknellboy on Aug 3, 2015 14:02:52 GMT
Actually, not sure whether that is something you would want to post on an open forum.
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Post by pepperpot on Aug 3, 2015 14:52:07 GMT
Thanks for the reply Ed.
Just to get it off my chest I'll elaborate slightly;
On a rolling month basis the current loan book could be listed in it's entirety (something I guess CS would have to hand, or at least hope they do) and if redemptions/sales exceeded new loans made there would be a capital reduction required and we would all get a partial capital payback (if the facility is fully utilised). Similarly, the vice versa would allow a new capital raise to be listed on MT, making it fully flexible. From an investors point of view it would be nice to have a monthly update of the goings on as at the moment we are blind to how well the business is doing.
As bracknellboy pointed out it's not simple to see how much CS already have / could have / are going to have, and I need to do a bit of manual totting up to see how much CS exposure I personally have. Whereas if there was just one facility we could see at a glance how much head room there is for CS to call for more and how much personally I am exposed to them.
I didn't envisage going as far as a debenture, just a specific charge over 'all pawned assets' currently held, whether that would be easy to legally assign I have no idea... and I guess it would need to be cleared with any debenture holder if there is one.
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Post by MoneyThing on Aug 3, 2015 15:16:52 GMT
Afternoon,
I do understand what you are saying and can see that this would make sense. However from the borrower perspective it would require them to disclose the total size of their loan book. All I can say is that the total amount that has been assigned to MT is a fraction of their total assets. (Bearing in mind that they will only borrow what they can utilise/benefit from rather than having an overarching facility up to £X amount).
As it stands now, we have a total of £430,000 of MPs and a little over £51,000 of individual loans still in play. Over time the individual loans will disappear as all new loans are exclusively MPs.
Perhaps it would be useful if I detailed on the new loan announcements (forum & email), total borrowing by the Partner?
Regards,
Ed
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Post by bracknellboy on Aug 3, 2015 17:03:30 GMT
pepperpot: apologies if this is in danger of hijacking the thread, but it does all seem related. Knowing the total amount lent is helpful, though without access to CSs overall financial data I'm not sure what one could conclude from it (other than perhaps the extent to which MT is exposed to a single borrower). I wonder whether I'm alone in starting to have slight twitches about further lending on CSs. I see no reason to treat the aggregate as anything other than a loan to a single SME borrower, with security being a very large bag of bits and pieces which could have a pretty high cost of disposal in the event that MT had to take charge of the process. The nature of the security here is a little different either from ANO online p2p pawn where the platform at least has physical as well as title charge, or other types of security such as property/machinery etc. It seems to me that lenders have all the normal risk associated with loans to a single business (business goes bust) plus the normal mis-valuation risk, but also the lack of physical custodianship by the platform adds another additional element which we should be taking into account. Funny things can happen when a business gets into trouble. [Just to be clear, no aspersions being cast on any of the players involved]. In aggregate my CS lending position is the largest I have to a single business anywhere in my p2p portfolio. Welcome others thoughts / views as maybe I'm coming at this from the wrong angle.
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Post by Deleted on Aug 3, 2015 17:08:18 GMT
bracknel, makes complete sense to me, the only good thing is that at least this is the business the borrower is in rather than say house building. It puts a ceiling on how much I want in MA but not there yet.
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Post by bracknellboy on Aug 3, 2015 19:23:04 GMT
In aggregate my CS lending position is the largest I have to a single business anywhere in my p2p portfolio. quoting ones self is a possible sign of madness, however possibly better than editing a couple of hours later. I guess where I'm getting to is that since for practical purposes - esp. given that many lenders will be in many tranches - this is only marginally different from an aggregated set of loans to a single borrower with a single shared pool of security, at what point should one be drawing a line unless one has had the opportunity to review the fundamentals of the borrower. Do we really view the security underpinning the lending, including MTs ability to both get its hands on it and dispose of it cost efficiently, as so rock solid that all else is immaterial ?
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Post by pepperpot on Aug 3, 2015 23:16:14 GMT
I said about a month ago that I hoped a new partner would come on board so we could spread it around a bit, I think Ed must have misread me and signed up Mrs Thing. Wasn't quite what I had in mind.
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paulgul
Member of DD Central
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Post by paulgul on Aug 4, 2015 7:52:07 GMT
I said about a month ago that I hoped a new partner would come on board so we could spread it around a bit, I think Ed must have misread me and signed up Mrs Thing. Wasn't quite what I had in mind. Wasn't the last £70k MP with a new partner. I thought the name "Buybacks" was mentioned - I assumed this was a new company Ed was dealing with, I might have got hold of the wrong end of the stick
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Post by MoneyThing on Aug 4, 2015 8:17:25 GMT
In aggregate my CS lending position is the largest I have to a single business anywhere in my p2p portfolio. quoting ones self is a possible sign of madness, however possibly better than editing a couple of hours later. I guess where I'm getting to is that since for practical purposes - esp. given that many lenders will be in many tranches - this is only marginally different from an aggregated set of loans to a single borrower with a single shared pool of security, at what point should one be drawing a line unless one has had the opportunity to review the fundamentals of the borrower. Do we really view the security underpinning the lending, including MTs ability to both get its hands on it and dispose of it cost efficiently, as so rock solid that all else is immaterial ? Morning bracknellboy, I do fully understand what you are saying and that ultimately, whilst all the CS Managed Portfolios & Individual Loans represent a very high number of individual loans, it is still just one borrower. I'm not sure at this point what I can suggest to give you additional comfort, however I will have a think about it and if anyone has any suggestions I would be happy to consider them. I am still pursuing and focusing on bringing other Partner's on. The one I mentioned previously is still in play, and whilst it has transpired that I was wildly optimistic as to the timing, I am still optimistic as to it's fruition. (I am planning to meet with the Directors next week to hopefully conclude all the legals). Kind regards, Ed
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Post by mrclondon on Aug 4, 2015 10:26:03 GMT
FWIW I have steered clear of the electronics porfolios apart from a few quid of interest re-invested rather than withdrawn. I'm generally uncomfortable with this end of the pawn business, and struggle to understand how the business model works (who buys £40 laptops ??) . This thread has added to my concerns - if CS went bust in theory MT take possession of a mountain of bits and pieces. With patience the jewellery would be auctioned off, and at 50% LTV on the whole we (& MT) should come out ok. But without CS's shop windows and backup services (the cleaning and testing ) would MT be able to dispose of the electronics at 50% LTV ? I'm far from sure.
IIRC we are now at £170k of electronics (£50k + £50k + £70k ) which is 35% of the £481k figure Ed mentioned yesterday that CS have outstanding to us. My concern is at what point does the risk of being unable to realise the electronics security if CS went bust have a material impact on the survival of MT ?
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