Posted on 20 December 2016
AlliedExchange Managing Director at AlliedCrowdsAbout AlliedExchange
There is a lack of efficiency in the market to invest in emerging markets debt securities, primarily due to the high cost of due diligence. The debt platform would overcome this constraint by identifying and partnering with organizations that have already completed the necessary due diligence processes required and allow for pre-approved institutions to refinance existing loans of various forms.
As an example, an institution (bank, project finance issuer, development finance institution, multilateral or bilateral aid organization, etc.) approves and then sets the terms of a loan after conducting its own due diligence, structuring, agreeing on milestone payments, T&C, interest rate, collateral, payment period, etc. The loan may have already been issued, but is currently sitting on the books of the lender. Next, the institution would place a portion of the loan onto the debt platform, allowing members of the crowd (both institutional and retail investors) to purchase the debt.
Initial research suggests that there is also an appetite for allowing small shares of syndicated deals to go on the platform. As an example, large ‘Bank X’ has a $250 million debt deal that, due to its size, they syndicate out to a range of partners. Conversations with potential 'Bank Xs' have suggested that the platform could receive small slices of the syndicated deal ($1-2 million in this example), which would either be underwritten by 'Bank X' as part of their CSR/impact efforts, or underwritten by one of our partner development institutions. On top of potentially opening up a new customer base for 'Bank X,' this method would allow investors access to previously unavailable syndicated debt deals in the SSA region.
According to the IFC, SMEs in the SSA region face a credit gap of over $70 billion. The proposed debt platform addresses supply-side constraints within the SSA region’s SME debt capital market by increasing liquidity for issuer of these loans, and creating a way for non-traditional investors in this market to participate via purchasing portions of loans on the platform and/or participating in syndicated debt deals.
This proposed platform will use P2P lending technology to present a range of SSA loans to both retail and institutional investors, including diaspora, HNWIs, hedge funds, family offices, banks, development institutions, etc. The platform will have the ability to transact trades and manage accounts. Initially, the platform will be regulated by the FCA, but regional authorization will be sought in due course.
AlliedExchange offers benefits previously unavailable to funders, such as: leveraging social impact, lowering balance sheet exposure, providing liquidity, increasing social awareness, creating additional funding opportunities, and potentially creating a secondary market for their debt. There are also benefits to investors on AlliedExchange: portfolio diversification, access to engage with home countries for diaspora investors, and the ability to invest in an asset class that has undergone a thorough due diligence process. AlliedCrowds has already secured expressions of interest from potential providers and buyers of debt on the platform.
Taking ownership of the project and being the key driver of its ultimate success;
Overseeing development of technology platform that will support the marketplace of debt providers and buyers;
Liaising with clients on both sides of the platform (providers and buyers of debt);
Identifying and pursuing new business opportunities;
Pitching the platform to potential investors in the business;
Interacting with legal team in order to ensure regulatory compliance; and
Hiring and managing a support team.
10+ years of relevant experience (in international banks, development finance institutions, etc.), especially in debt;
5+ years of experience working (and living) in SSA;
Excellent written and verbal communications skills, especially when it comes to interacting with potential clients and investors;
A talent for project and people management; and
A deep understanding of capital markets in SSA.
Package will consist of an attractive mix of cash and equity compensation; we hope you can retire on the money you make here.