creditshelf plans initial public offering in Q3 2018
– creditshelf Aktiengesellschaft today announces its intention to pursue an initial public offering and the listing on the regulated market (Prime Standard) of the Frankfurt Stock Exchange in the third quarter of 2018
– Market and technology leader in the fast-growing German marketplace lending segment for small- and medium-sized enterprises (“SMEs“)
– Highly automated, cost-efficient and scalable platform matching the inherent need of both, SME borrowers and professional investors
– Strong growth potential due to significant gap in credit supply in the German SME segment coupled with multi-dimensional growth strategy
– The offering is expected to consist of a primary offering of newly issued shares of creditshelf of approx. EUR 15-20 million
– Long-term shareholder Hevella Capital GmbH & Co. KGaA (controlled by Rolf Elgeti) has placed a backstop order of up to EUR 15 million
Frankfurt, 03 July 2018 – creditshelf Aktiengesellschaft (“creditshelf” or the “Company”) is a pioneer of online market place lending for German small- and medium-sized enterprises with annual revenues between EUR 2.5 million and EUR 100 million and implied credit ratings between BB and B. Since its foundation in 2014, the Company has successfully developed its online market place lending platform which is backed by its proprietary, data-driven risk-scoring algorithm for credit analysis (the “creditshelf Platform”). creditshelf acts as a credit intermediary between SME borrowers and professional investors and does not hold any loans on its balance sheet(1). Its product offering comprises unsecured loans with a tenor between 1 to 60 months.
In the period from the launch of the creditshelf Platform until 31 March 2018, creditshelf has received more than 1,100 SME loan requests via its platform with a total amount of approx. EUR 900 million. In total, 127 loans with a total volume of approx. EUR 58 million have been brokered through the creditshelf Platform in the same period. In the second half of 2017, the brokered loans had an average volume of approx. EUR 540 thousand, an average interest rate of approx. 9% and an average tenor of approx. 17 months.
Market leader in the fast-growing German SME market place lending segment
creditshelf addresses the attractive and largely underpenetrated market for SME market place lending in Germany. Through its fully integrated online platform (www.creditshelf.com), the Company connects SME borrowers looking for alternative financing solutions with institutional and professional investors looking for efficient access to SME loans. Whilst the SME market place lending segment in Continental Europe is still underrepresented, it offers significant growth potential given the rising demand of SME borrowers for financing alternatives. Based on recent data from a study conducted by Zeppelin University Friedrichshafen(2), the total bank loan volume to SMEs (corporates with revenues below EUR 50 million p.a as defined by the authors of the study) in Germany amounted to EUR 293 billion in 2016 and has remained nearly unchanged since 2005 (EUR 287 billion) despite significant growth of nominal GDP over the same period (+37%). The resulting ‘credit gap’, which the Company estimates to amount to additional EUR 100 billion, is mainly driven by more restrictive SME lending policies of traditional banks following the financial crisis due to increasing regulation and high process costs of SME lending. Accordingly, the Company targets a total SME loan market volume in Germany of approx. EUR 393 billion (existing SME bank lending plus implied credit gap). Assuming an online market place penetration potential of 10% for SME lending, which represents a conservative estimate compared to more advanced markets like the UK (13.9% in 2015), creditshelf’s addressable market amounts to approx. EUR 39 billion. With an indicative coupon range of 6-12%, the Company is attractively positioned to capture strong growth due to SMEs’ financing needs, in particular versus more expensive SME financing alternatives like factoring, supplier credit or equity.
Highly scalable platform based on proprietary, data-driven risk management algorithm
The creditshelf Platform represents a fully integrated, cloud based platform combining the entire credit process from application to credit analysis and risk management to auctioning, disbursement and servicing of a loan. The company’s proprietary data-driven risk management algorithm forms the heart of the creditshelf Platform. Compared to traditional linear credit analysis models, which are based on quantitative factors such as historical financials and 3rd party credit data, creditshelf makes use of a multi-dimensional risk analysis combining accounting information, cash transactions and sophisticated network analyses backed by artificial intelligence and big data analysis. This fully automated process allows creditshelf to sort out non-suitable loan applications in a first step fully automatically (mid-term target: approx. 70% of loan applications) and allows for high scalability of the business. In a second step, the Company’s credit experts evaluate the remaining loan applications leading to a final selection and indicative pricing of the highest quality loans with an acceptance rate of approx. 15% (mid-term target) while maintaining the current default rate of 3% through the cycle. Based on its highly automated credit analysis, the Company is disrupting the traditional credit process and enables a credit decision and payout of loans within short periods of time of currently often only between one and two weeks whilst traditional banks’ credit approval typically requires up to 3 months, representing a clear competitive advantage.
Backing from Top Tier investors demonstrates the quality of our platform
creditshelf offers an attractive value proposition for investors that seek exposure to German “Mittelstand”, an asset class that is hard to access via the capital markets. In addition, loans brokered through the creditshelf Platform offer attractive yields of 6-12% compared to low yields of traditional debt products such as investment-grade corporate bonds. As a result, the Company attracts a broad range of high quality investors to the creditshelf Platform. These comprise institutional investors, e.g. Banco BNI Europe, who have so far accounted for 42.6% of total funding(3), more than 200 registered high net worth individuals and family offices (15.7% of total funding) as well as Obotritia Capital KGaA (backed by Rolf Elgeti) as anchor investor (41.7% of total funding). Due to its strong value proposition, creditshelf has a rate of approx. 74% recurring investors as of March 31, 2018(4).
Multi-dimensional growth strategy translating into a mid-term target of approx. EUR 500m executed loan volume p.a.
As a result of the strong demand for German SMEs for unsecured loans, creditshelf is experiencing significant growth momentum as reflected by a CAGR of >330% to EUR 34 million in terms of executed loan volume from 2015 to 2017. As a consequence, generated revenues have increased from 0.01m in 2015 to EUR 1.2 million in 2017, derived from fees charged to both borrowers (1-5% of the principal loan amount)(5) and investors (1% p.a.) on the creditshelf Platform. The Company has identified three strategic pillars for additional growth going forward:
– Software development:
Further development of the proprietary, data-driven credit decisioning support and credit scoring algorithms and models to conduct deeper, more efficient and automated analysis, in particular through further implementation of artificial intelligence and machine learning
– Bank cooperations:
Strategic cooperations with banks regarding the referral of potential borrowers from their networks to the creditshelf Platform. Discussions with a number of private and commercial banks have already been initiated
– Product portfolio expansion:
Enhancement of product portfolio by complementary products such as factoring, revolvers, bank guarantees or analysis-as-a-service
In combination with growth stemming from the high scalability of its existing activities, creditshelf pursues a mid-term target of approx. EUR 500m p.a. of loans brokered through the creditshelf platform.
Notwithstanding its current focus on Germany, the Company has in addition commenced to evaluate options for future international expansion into selected European markets in the mid-term whilst any international expansion will depend on the suitability of the proposed upcoming pan European crowdfunding regulation for the creditshelf business model.
Dedicated founders and highly qualified management team
creditshelf’s management team combines c. 50 years of experience in the banking and rating agency industry coupled with international experience. The team is led by Dr. Tim Thabe (co-founder & CEO), Dr. Daniel Bartsch (co-founder and COO) and Dr. Mark Währisch (CRO), who identified the shortcomings of traditional credit analysis as carried out by banks and built-up creditshelf with a vision to disrupt the SME lending business.
Dr. Tim Thabe, CEO and co-founder of creditshelf, comments: “The IPO will allow us to execute
our growth strategy based on clearly defined pillars including software investments, product expansion and the implementation of bank co-operations. Through these measures we target to achieve our goal of approx. EUR 500m loan volume p.a. in the mid-term.”
Dr. Daniel Bartsch, COO and co-founder of creditshelf, explains: “The funds from the capital increase will enable us to foster our positioning as a leader in the German market place lending segment and leverage the strong demand from SMEs for financing alternatives. We aim to increase our perception as the partner of choice for both SME borrowers as well as professional investors seeking for access to this asset class.”
Dr. Mark Währisch, CRO of creditshelf, adds: “We will continue to further develop our data-driven risk management and scoring algorithm through targeted investments in artificial intelligence and machine learning in order to further foster creditshelf’s competitive edge with regards to our unique technology and take credit analysis to the next stage.”
Overview of the Offering and use of proceeds
The offering is expected to consist of newly issued shares from a capital increase in the amount of approx. EUR 15-20 million.
Hevella Capital GmbH & Co. KGaA (backed by Rolf Elgeti) has placed a backstop order of up to EUR 15 million if and to the extent the shares are not subscribed for by investors in the course of the offering, underlining its strong, long-term support for the creditshelf business model.
creditshelf intends to use the net proceeds from the offering to fund further development of its proprietary data-driven risk analysis algorithm, to expand its product portfolio, to implement bank cooperations and to increase brand awareness via increased marketing. In addition, proceeds will be used to hire key personnel, to optimise working capital and for certain payouts under certain employee incentive agreements.
As of the date of this release, Hevella Capital GmbH & Co. KGaA (controlled by Rolf Elgeti) holds 46.1% of shares in creditshelf, while Dr. Tim Thabe (via LDT Investment UG) and Dr. Daniel Bartsch (via DBR Investment UG) are holding 23.2% and 21.7% respectively. The remaining shareholders comprise Wahtari GmbH (5.8%) and Purum AG (0.9%) and certain other shareholders (2.3%).
Lock-up agreements will be concluded for the Company (12 months), Hevella Capital GmbH & Co. KGaA (18 months) and members of the Management Board (24 months).
Commerzbank is acting as Sole Global Coordinator and Sole Bookrunner. Lazard is acting as financial adviser to creditshelf.
(1) The loans are issued by a so-called Fronting Bank. Such Fronting Bank has a banking license under applicable German law and is used, because under applicable German law, originating loans generally requires such banking license. If the Fronting Bank decides in its own discretion to grant a loan to the borrower, it then sells the loan receivables to creditshelf service (a 100% subsidiary of creditshelf Aktiengesellschaft), which in turn sells the loan receivables in tranches to the investors who have submitted successful funding commitments via the creditshelf Platform and who then form a syndicate with creditshelf service. Currently, creditshelf works with MHB-Bank Aktiengesellschaft as its Fronting Bank.
(2) Mietzner, Mark – “Die globale Fintech-Revolution: eine Chance für KMUs”, Zeppelin Universität Working Paper / Finance & Accounting, April, 2018.
(3) As of March 2018 for loans paid out by the Fronting Bank until December 31, 2017.
(4) “Recurring Investors” are defined as the number of investors who invested in in more than one credit project brokered through the creditshelf Platform.
(5) Depending on the credit scoring of the borrower and the term of the loan.
creditshelf is a pioneer of online market place lending for the small and medium sized enterprises (“SME”) segment in Germany that connects borrowers and investors through a fast and easy to use online platform, www.creditshelf.com. Founded in 2014, creditshelf is based in Frankfurt am Main, Germany and considers itself the market- and technology leader in the fast-growing German market place lending segment (peer-to-peer lending) for SME loans. creditshelf’s peer-to-peer platform (“creditshelf Platform”) is designed to match the financing needs of German SME borrowers with investors willing to invest in SME loan receivables. In this process creditshelf offers to broker unsecured loans and thereby acts as an intermediary offering access to a highly attractive funding alternative for SMEs. At the same time, it offers access to the SME loan asset class for professional investors seeking for attractive investment opportunities. creditshelf’s main competences are selecting suitable credit projects, analyzing the creditworthiness of potential borrowers, providing a credit scoring as well as an indicative coupon range. For its services, creditshelf receives fees from both, SME borrowers as well as from investors.
In the period from the launch of the creditshelf Platform in 2015 until end of Q1 2018, creditshelf received in total more than 1,100 loan applications with a total requested volume of approx. EUR 900 million. In total, 127 loans have been brokered through the creditshelf Platform with a total volume of approx. EUR 58 million.
creditshelf considers itself to be ideally positioned for future growth due to the high scalability of its platform business model, the strong demand from SME borrowers and the low market place lending penetration in the German SME segment to date. In addition, the company has identified three pillars of additional growth: software development, potential future bank cooperations and a potential product portfolio expansion.
Telephone: +49(0)611 – 205855-22
Fax: +49(0)611 – 205855-66
These materials may not be published, distributed or transmitted in the United States, Canada, Australia or Japan. These materials do not constitute an offer of securities for sale or a solicitation of an offer to purchase securities (the “Securities”) of creditshelf Aktiengesellschaft (the “Company”) in the United States, Australia, Canada or any other jurisdiction in which such offer or solicitation is unlawful. The Securities of the Company may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Securities of the Company have not been, and will not be, registered under the Securities Act. There will be no public offering of the securities in the United States. The securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan subject to certain exceptions.
In the United Kingdom, this document is only being distributed to and is only directed at persons who (i) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Order”) or (ii) are persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) (all such persons together being referred to as “Relevant Persons”). This document is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
In any EEA Member State other than Germany and Luxembourg that has implemented the Directive 2033/71/EC, as amended by Directive 2010/73/EC (the “Prospectus Directive”), this document is only addressed to and is only directed at “qualified investors” in that Member State within the meaning of Article 2(1)(e) of the Prospectus Directive.
This publication constitutes neither an offer to sell nor a solicitation to buy securities. The offer will be made solely by means of, and on the basis of, a securities prospectus which is to be published. An investment decision regarding the publicly offered securities of creditshelf Aktiengesellschaft should only be made on the basis of the securities prospectus. The securities prospectus will be published promptly upon approval by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) and will be available free of charge from creditshelf Aktiengesellschaft, Mainzer Landstraße 33a, 60329 Frankfurt, Germany, or on the Company’s website.
This document contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management of the Company. Forward-looking statements should not be construed as a promise of future results and developments and involve known and unknown risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements, and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this document or the underlying assumptions. The Company does not assume any obligations to update any forward-looking statements.