U.K. fintech Fineqia connects savvy investors with asset-backed loans
It is an age- old problem for investors. Those looking for that ever- elusive mix of sta
bility and return are short on choices. The current economic climate only complicates matters; while interest rates are still near historical lows, they have begun on an upward trend in the past year, making ordinary bonds doubly unsatisfactory.
Fineqia (CSE: FNQ), a British Fintech startup, is hoping to fill that void by giving investors and investment houses another option. The company’s London, U. K.- based platform offers Canadian investors access to Fineqia’s pool of vetted, asset- backed debt and equity solutions by packaging offerings that were once only available to financial institutions or hedge funds.
The goal is to expand choice. “As our name implies, we believe in financial equality,” says CEO Bundeep Singh Rangar. “We want to democratize access to deals, and not have them be privy only to select parties.”
Rangar moved from his home in Ottawa to London 20 years ago, first working in tech and financial services before combining them in the now-thriving world of fintech, of which London is the world’s primary hub.
There, he noticed many investors seeking opportunities who simply didn’t get exposed to the kinds of deals that might normally require significant backing through financial institutions.
“Some of the best deals simply weren’t available to some of the most sought-after investors,” says Rangar.
Of particular interest to Rangar were asset- backed loans, as he personally established channels of financing amidst the 2008 financial crisis credit freeze.
“The idea for Fineqia was born to help create a platform to effectively match those companies that are originat- ing asset- backed loans, and thus relatively safe, with financial institutions, family offices, hedge funds and more.”
In that sense, Fineqia is akin to crowd- funding, but focusing just as much on investors seeking yield as those seeking to raise capital. The aim is thus to bring investors opportunities and also provide companies and projects a platform for funding without going the traditional route.
The twist, however, is that rather than merely acting as a neutral intermediary, Fineqia vets each opportunity for risk and return. Some are equitybased, which Rangar says offer the balance of “equity-like risk and possibly equity-like returns,” and will be subject to the usual scrutiny given early stage companies based on balance sheets, IP and the always- sought- after “secret sauce.”
The focus, however, will be on debt securities, and Fineqia has chosen to aim at low-risk asset classes to offer novel investing opportunities. Unlike the big banks, however, Fineqia’s digital platform allows it to bypass much of the institutional or compliance overhead that comes with financial institution. That means everyone from high-net- worth investors to family offices to hedge funds not only have access to investing opportunities that might otherwise be obscured from their normal processes, it also means that yields may be potentially higher.
It’s a core part of the appeal of fintech.
“You’re lowering the cost and burden of the transaction,” says Rangar, “and you pass on the efficiencies to both parties.”
More than that, however, is the increase in the range of choices.
“You empower the end user as to what asset they invest in,” Rangar says. After the financial crisis certain types of debt securities, such as those that were part of the upheaval, can still elicit a raised eyebrow. But Fineqia’s platform not only lets sophisticated end users choose what asset class they invest in, it also gives them access to the data they need to make an informed decision.
That kind of f or ward thinking offers another opportunity for Canadian investors. Fineqia’s listing on the Canadian Securities Exchange allows Canadians an entry point into the broader innovation in fintech, which for now remains focused in London.
It’s a point of connection and transmission that Rangar hopes is more broadly embodied with Fineqia.
“A lot of what happens in the U.K. eventually makes its way to Canada,” he says. “We are learning from our experience in the U. K., and can import best practices and that successful model into Canada.”