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, Gofingo Group companies have the Gofingo Group guarantee. The Group guarantee with the buyback guarantee work as a 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 what is 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 full protection to investors.

Explaining briefly, in case some company of our Group would face financial troubles and would not be able to implement the buyback guarantee, the Group guarantee would be applied, i.e. all the liabilities of that company would be covered by the guarantor company according to the Group guarantee agreement.

I would like 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. Considering the fact that we are constantly accumulating a cash reserve, we can easily 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 that do not participate in P2P. It is important to mention that companies that participate in P2P generate half of the profits of the entire the 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 have 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. The largest role in the Group’s guarantee model is played by Polish and Ukrainian companies. Every relatively new company that participates in P2P has Group guarantee contracts with at least two profitable companies of our Group. For example, our Vietnamese company Senmo has a Group guarantee from both the Aventus Group and the Gofingo group, as the company is partly co-owned by the Gofingo Group.

In this context, smaller companies have acquired strong mentors who not only carry out regular monitoring of 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 makes sense, what works in the client’s favor. PeerBerry investors have never experienced any delayed withdrawals or pending payments just because we are acting in the investor’s favor. In case the guaranties are on the 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 not necessary in our case. First, because 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, and it is 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, but due to differences in laws and taxes in different countries, this process is so complex that the price of the whole process is inadequate to 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, as in the case of Senmo, when the Vietnamese company is co-owned by the Gofingo group.

Under our business model and laws, operational and financial consolidation is not mandatory for us. Aventus Group companies do not issue bonds, do not participate in stock markets, we operate in non-banking sector, so we simply do not need it. If the laws would change and it was required otherwise, we would do as the law requires. We always focus on our core goals that 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 do 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 to disclose the Group Guarantee Agreements in other ways.