Debt, Dubai, Fintech

The UAE’s First p2p Default?

Beehive p2p

Beehive, the UAE’s p2p online lending platform, appears to be facing its first loan default.

Launched in late 2014 by Craig Moore and former EmiratesNBD CEO Rick Pudner, the group in its first year issued around AED 25mn in loans to 48 SMEs in the UAE. By 2016 the platform had signed up around 2,000 investors and provided AED 30mn in loans to about 60 SMEs.

Trouble first appeared on the 18th July 2016, when investors received the following message from Beehive.

The payment for Radiant Engineering FZC is currently delayed due to administrative reasons with their bank. We apologise for the delay, we will update you with an expected payment date within the next 48 hours.

Radiant was established in 2005 to provide customised energy solutions. Their product profile includes EPC Solar projects up to 5 MW, lighting towers and transformer packages. The group aims to provide a one stop solution for power generation in standby, prime and continuous power requirements.

Radiant had joined Beehive seeking finance to fund a new sales office and purchase additional machinery. The amount they raised was AED 350,000 for a term of 24 months. Beehive had rated the firm a “C” and had priced the loan at 12.4%.

The company had successfully repaid 9 out of 24 scheduled monthly installments.

According to Beehive, Radiant was generating revenues in the AED 10-25mn range, with 3.1% revenue growth and a Net Profit Margin of 7.0%. Beehive didnt offer any details on whether these were trailing twelve month figures or multi-year averages.
Repayment Coverage Strength was rated at “Fair”

On the 20th of July 2016, Beehive – no doubt scrambling for a tidy resolution to its first default – issued another update to investors.

As per our notice sent on 18.07.16, Radiant Engineering’s 10th installment cheque dated 16.07.16 was not honoured by their bank. We are in communication with the shareholders and hope to resolve the issue. The installment is now 4 days past the due date and so your investment is now classified as an Overdue Account and as such, all secondary market transactions will be suspended as per our Investor Terms. We will provide updates accordingly.

Radio silence for a month, and Beehive comes back on the 15th August with a not-so-great update.

Radiant missed its 10th instalment of its 24-month business finance line which was due on 16 July and will miss its instalment on 16 August Due to the economic downturn in the UAE, the business suffered non-payment from some of its customers and the owner is in negotiation with its banking partners to restructure its lines. We are in weekly discussions with the business owner regarding the current situation and working in parallel with Radiant’s banking partners. The business owner is fully committed to resolving the current situation and we have been notified of new orders secured and the owner’s plans to get the company back on a sound financial footing. We will continue to talk to the business owner but we expect that the business will not be in a position to honour its August or September instalments and it appears that Beehive’s Business Finance line will need to be restructured. The owner has asked for a short-term repayment holiday and we are working with him to understand the length of this and the financial impact. We will notify you once we have more clarity.

Unfortunately Beehive doesn’t allow investors to review the breakdown of a company’s financing after the auction process closes. It would be interesting to note the composition of the loan, i.e. how large was the single biggest lender, how many in total have been affected, and the average loan.

We would like to know if Beehive management had seen any degradation in Radiant’s liquidity profile in recent months, begging the question, how actively do they monitor companies once on the platform? continues to follow the situation and will update readers with developments around the UAE’s first p2p loan default, and possible restructuring.


Further reading:

Wamda: The UAE’s first P2P SME finance platform

The National: Rick Pudner’s journey from UAE big banker to crowdfunder

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