19 November 2020

The Group guarantee - how does it work?

All loans listed on the PeerBerry platform have a buyback guarantee. Loans issued by Aventus Group and Gofingo Group companies are additionally covered by the Group guarantee, i.e., all Aventus Group companies have the Aventus Group guarantee, and Gofingo Group companies have the Gofingo Group guarantee. The Group and the buyback guarantees work as double protection for PeerBerry investors.

Loans issued by Aventus Group companies on the PeerBerry platform account for about 70% of the total loan portfolio. We asked Andrejus Trofimovas, CEO of Aventus Group, to explain what is the legal basis of the Group guarantee and how would this guarantee work in case of need.

Aventus Group is a group of companies operating in different countries. Can you explain the legal basis of the Group guarantee to be applied for separate companies of the Group?

The initial purpose of the Group guarantee is to ensure complete protection for investors.

Explaining briefly, in case some company of our Group faces financial troubles and cannot implement the buyback guarantee, the Group guarantee would be applied, i.e., the guarantor company would cover all the liabilities of that company according to the Group guarantee agreement.

I want to emphasize that since the beginning of our partnership with PeerBerry, we have not had a single case in which the Group guarantee has been required, and we do not see any indications that this guarantee should be applied.

The total loan portfolio of the Group companies at the end of October amounted to 75,8 million EUR. Our debt to P2P investors currently is about 18,5 million EUR. We are already estimating a net profit of around 10 million EUR from our business this year. Because we are constantly accumulating a cash reserve, we can quickly settle with all investors in a relatively short time.

As for the legal side, there are multiple guarantees between our companies – different companies have signed Group guarantee agreements with separate companies entire the Group. I want to emphasize that all Aventus Group companies are involved in the Group guarantee model, including those not participating in P2P. It is important to mention that companies that participate in P2P generate half of the profits of the entire Group. When assessing the profit and equity of these companies, it would be sufficient to sign Group guarantee agreements between these companies only. However, we want to ensure maximum protection for investors, so we have involved all Group companies in the Group’s guarantee model.

Before applying the Group guarantee in our Group, we consulted with lawyers who have experience dealing with the Group guarantee models in large multinational companies and I believe that the model we have chosen is not only legally correct but also effective inside the Group.

Implementing the Group’s guarantee model, we divided our companies into different levels of profitability. Polish and Ukrainian companies play the largest role in the Group’s guarantee model. Every relatively new company that participates in P2P has Group guarantee contracts with at least two profitable companies in our Group.

In this context, smaller companies have acquired strong mentors who not only regularly monitor their performance but also advise on how to work more effectively.

Some investors believe that a Group guarantee makes sense only if the consolidated finances of the Group companies are available. What would you answer to that?

Everything that works in the client’s favor makes sense. PeerBerry investors have never experienced delayed withdrawals or pending payments because we are acting in the investor’s favor. In case the guarantees are on paper only, of course, that makes no sense. Sadly, I see in the market that investors have been promised a buyback guarantee, in some cases – even a Group guarantee, but the client did not receive these guarantees. It is an unfair practice we do not tolerate.

Speaking about the Aventus Group additional Group guarantee and Group financial consolidation, I have to say that this is unnecessary in our case. First, legally, the Group’s guarantee agreements are signed between different group companies. All our group companies operate as separate legal entities that prepare separate financial statements under local laws and regulatory requirements. I want to emphasize that all companies in our Group must audit their finances, which are very seriously controlled on the local country level. In 2019, the audit was not mandatory only in Kazakhstan, but from this year, the financial statements will be audited in this country as well.

We were investigating the possibilities of the consolidation of the finances of our Group and the audit of the consolidated Financial report. Still, due to differences in laws and taxes in different countries, this process is so complex that the price of the whole process is inadequate for the benefits we would get from this consolidation.

It would not even be possible to fully consolidate the finances of all our companies since some companies are partly co-owned by other legal entities.

Under our business model and laws, operational and financial consolidation is not mandatory for us. Aventus Group companies do not issue bonds or participate in stock markets; we operate in the non-banking sector and simply do not need it. If the laws would change, we would do as the law requires. We always focus on our core goals, which are: 1) to be profitable in all the markets in which we operate and 2) to provide outstanding performance, including all guarantees to investors, which is what we have done together with PeerBerry for three years already.

Nota Bene. The Group Guarantee Agreements are internal documents signed between Group companies. Aventus Group retains the right not to disclose these Agreements to the public. PeerBerry has copies of the Group Guarantee Agreements, but PeerBerry is not a party to these Agreements. Therefore, PeerBerry is also not entitled to publish or disclose the Group Guarantee Agreements in other ways.