CapitalBay (Link) is a new peer-to-peer (P2P) financing platform in Malaysia. I have managed to enrol into its Early Access Programme. I am going to give an overview of this new platform here.
Background of CapitalBay
This company was launched in 2016 and is the first Multi-Bank Supply Chain Finance (SCF) platform in Malaysia licensed by Securities Commission Malaysia. What is SCF?
According to Investopedia,
“Supply chain finance (SCF) is a set of technology-based business and financing processes that link the various parties in a transaction—buyer, seller, and financing institution— to lower financing costs and improve business efficiency. Supply chain finance provides short-term credit that optimizes working capital for both the buyer and the seller.
Supply chain finance utilizes business solutions that optimize working capital and provide liquidity to businesses. Under SCF, suppliers sell their invoices or receivables at a discount to banks or other financial service providers, often called factors. In return, the suppliers get faster access to the money they are owed, enabling them to use it for working capital, while buyers generally get more time to pay. Instead of relying on the creditworthiness of the supplier, the bank deals with the buyer.
(Investopedia Definition Link)”
In essence, the issuers sell their invoices or receivables to financial institutions to get cash earlier. CapitalBay has started its first live transaction in 2017 and has won multiple awards. Before the launch of its P2P platform, its funders are banks, institutions and financial advisors.
Attractiveness of CapitalBay
Why do I choose this platform? Below are the reasons.
- Access to a steady supply of notes (more than 2000 transactions facilitated since its inception)
- 0% default rate from its credit scoring model
- Invest alongside banks
- Shorter-term notes (standard tenure is around 180 days) secured on receivables with blue-chip corporations
- Interest rate of up to 14% per annum
Fee structure
CapitalBay charges a fee of 10 – 30% on interest earned. This fee is only deducted when interest is paid by the issuer.
Deposit and withdrawal
The minimum deposit amount is RM 1,000.00. It accepts deposit via bank transfer, internet banking or cheque. After the deposit, the user has to furnish the proof (transfer receipt) to the platform. It takes three to five business days for the deposit to show in account. It is a bit weird that it is not using any payment gateway such as FPX, but I guess CapitalBay might offer this option in the future.
Withdrawal process takes around three business days for the money to appear in the user’s bank account. The minimum withdrawal amount is RM 1.00.
There is no charge for both deposit and withdrawal.
Investment amount
According to its email, the minimum amount to begin investing is RM 50,000.00. Nonetheless, it is reduced to RM 10,000.00 for its Early Access Programme. We will need to deposit RM 10,000.00 to start investing. After the Early Access, the investors have to top up to RM 50,000.00 to stay in the game.
The minimum amount to be invested into a note is RM 1,000.00, with incremental of RM 100.00. It is much more higher than the other two P2P platforms that I have investing experience.
Conclusion
This platform attracts me due to two reasons. Based on its track record, the quality of the notes here should be quite good. Furthermore, we are investing alongside the institutional investors and I think these institutions would not risk their own money.
Nevertheless, I found out about the RM 10,000.00 and RM 50,000.00 minimum investment amount after I deposited RM 1,000.00 but could not see my balance. I contacted the platform and got an explanation. The customer service was prompt and I managed to get my refund. As I do not have such a large fund to dedicate to P2P lending, I could not participate in the deals on this platform.
