Smart Lenders AM is an asset management company that proposes an algorithmic approach to investing in loans issued by online lending platforms such as Lending Club or Prosper. It manages funds (a Luxembourg SIF SICAV currently) that invest in consumer and small business loans that are selected through online lending platforms. The company offers a turn-key investment product for investors wanting to get access to the attractive returns offered by online lending, with an increased safety, large diversification and an optimal allocation.
Architect behind Smart Lenders AM
Smart Lenders AM is founded by Erich Bonnet, he also serves as CIO and CEO of the company. Erich has 33 years of experience in trading, asset management and private investments. Erich started his career in 1986 as a trader of interest rate derivatives at Banque Indosuez and became Head of the interest rates derivatives team. He created Transoptions Finance in 1989, a market making company specialized in derivatives. Transoptions became a leader in several European markets (France, Germany, Spain, UK, etc.) competing with the biggest European banks. In 1998, Erich launched ADI Alternative Investments, a Paris-based alternative asset management company specialized in arbitrage strategies (Convertible Bonds, High Yield and Credit, Merger Arbitrage and Special Situations in particular). ADI has been awarded multiple times and became the largest independent alternative investment manager in Paris with more than 400 institutional clients and up to €6.5bn AUM. The company has been sold between 2005 and 2008 and Erich exited the business in 2009. Prior to founding Smart Lenders AM in 2014, Erich launched a couple of investment vehicles with personal and friends & family money in Distressed Assets, Real Estate, Containers, Life Settlements, Loans, and Private Equity. Cumulative investments amount to €200m. Having started investing privately in Marketplace Lending two years before, Erich launched Smart Lenders AM in 2014 to offer access to this investment opportunity to European investors.
Erich has a unique mix of experience combining trading and investments in complex financial instruments and illiquid assets, as well as innovative and opportunistic ideas. He federated a diverse team of talented individuals around Smart Lenders AM to effectively tackle today’s quickly moving investment world.
Services from Smart Lenders AM that Standalone in the Crowd
Smart Lenders AM has developed its own credit scoring and selection models using a blend of statistical, algorithmic and machine learning methods. These models are plugged directly into the platforms’ API and enable to score, select and purchase loans on platforms that allow pick and choose investment, in a matter of milliseconds. These knowledge and technology enable Smart Lenders AM to be one of the leading actors in Europe to invest in US platforms for the account of European investors.
In June 2018, Smart Lenders AM started a research program in Artificial Intelligence methods applied to credit scoring for European small and medium businesses. This research program started yielding very exciting results and, consequently, Smart Lenders AM has been granted the status of Young Innovative Company by the French Ministry of Education and Research. This status is granted, after a strong study from academics, to young companies that allocate a substantial share of their revenues to fundamental and applied research and make a significant contribution to the state of the art of research.
Benefits for Clients
Smart Lenders AM brings a very specific and distinctive investment solution to its clients that delivered them high yields (and a consequent strong return), very good diversification with the rest of their portfolio, and a relatively low risk.
The clients also have access to a new asset class and a fast-developing industry, thus giving them exposure to new technologies and know-how that will undoubtedly soon become very beneficial for them.
Successfully Dealing with Increasing Complex Regulations
Smart Lenders AM is an asset management firm registered and regulated by the French AMF (the financial markets regulator) and the fund it manages is registered and regulated by the Luxembourg CSSF. Smart Lenders AM also has the AIFM Full-scope status. As such, the company is strongly regulated and monitored by several highly diligent regulators. Regulation is part of the company’s investors’ DNA and part of the success of Smart Lenders AM has been to be able to structure suitable products that are able to invest in a new asset class such as marketplace loans in a regulated, cost-efficient and simple way.
Being aware of the constant evolution and increasingly complex regulation is a key element of Smart Lenders AM’s activity. The company has a dedicated Chief Risk and Compliance Officer and contracted with a specialized third-party advisory firm to ensure a constant monitoring of regulations.
Leading towards Dynamic Center of a FinTech ecosystem
As an asset manager, Smart Lenders AM is considered as an institutional investor by the platforms and thus as a client. The technology and the research efforts that the company is conducting in the field of credit scoring give it a technological leadership in the industry, both on the platforms’ side and on the investors side (and among other asset managers). The company aims to take a central role in the development of the European marketplace lending industry by interacting closely with platforms and other investors to bring them to use the highest standards in terms of models, technology, ethics and best practice.
Future Road-map for Smart Lenders AM
Smart Lenders AM expects to continue to grow the assets under management of its flagship fund, invested in US consumer and SMB loans principally. The company will soon launch a new product dedicated to European SMB lending through online lending platforms. In addition to that, the company expects to integrate the first outcomes of its research program into its daily models to improve the performance of the investments.