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Funds News

Germany's auxmoney partners with BNP Paribas to buy loans online

LONDON, Nov 10 (Reuters) - Auxmoney and BNP Paribas said on Tuesday that the German fintech would use financing from the French bank to begin buying loans on its own platform.

Düsseldorf-based auxmoney, which runs an online marketplace connecting individual borrowers in Germany with private investors and institutions, plans to invest up to 500 million euros ($595 million) in loans originated on its platform.

Auxmoney did not disclose how much of the total financing will be provided by BNP Paribas.

“We will be investing alongside our private and institutional investors on our marketplace,” auxmoney chief executive and co-founder Raffael Johnen said in an interview.

“It’s about alignment of interest,” he added.

Auxmoney’s move comes as many online lenders have struggled during the coronavirus crisis, which has hit economies worldwide and made consumer lending riskier.

Many lenders have tightened their credit requirements, leading to lower origination volumes and fees, while others have had to deal with diminished demand for loans.

Johnen said investor interest for auxmoney loans has remained strong during the crisis but he expects origination volumes to be lower than anticipated prior to the pandemic because auxmoney has adopted stricter lending requirements.

In September auxmoney raised 150 million euros in an investment round led by Centerbridge Partners. Other backers include Index Ventures and Union Square Ventures.

Auxmoney said that last year 700 million euros worth of loans were funded on its platform. ($1 = 0.8405 euros) (Reporting by Anna Irrera; Editing by Alexander Smith)

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