DigitalMosaic Raising a Fund for Emerging Market Marketplace Loans

Originally published in Debtwire 20 August 2018 | 17:09 EDT

Hedge fund seeks investors for emerging market P2P platforms; shoots to raise USD 50m

Digital Mosaic, a marketplace lending hedge fund, is seeking $25M-$50M to seed a fund to begin investing in marketplace lending startups in emerging markets, including Indonesia, Eastern Europe and several countries in Latin America, according to Eugene Lee, COO and portfolio manager.

The new fund will also invest in niche MPL sectors, such as POS financing, based in the US. The company is in talks with various hedge funds and is looking to close the round in the next six months. “Initially, we are targeting five P2P platforms to open the portfolio, but we have about 20 relationships established,” he said. “Expanding into this market is complex and returns can be lumpy, but are conservatively in the 12% range.  APRs in some markets often exceed 200%, so depending on the platform and investment structure, higher returns are possible.”

The company partnered with different venture capital firms and hedge funds in order to facilitate access to platforms and due diligence on governance structures, according to Lee. “A couple examples include a hedge fund in Texas, with which we are collaborating on a Mexico-based P2P platform and an Indonesia-based VC that has provided valuable diligence on their SEA portfolio companies,” he said. “Solvency analysis plays a larger role in our due diligence than traditional bank loan or corporate bond investments because the asset class is relatively new and many platforms have not been around for very long.

Digital Mosaic will employ AI and machine learning technology to more effectively identify quality loans. Aside from launching a P2P fund, Digital Mosaic operates Lending Mosaic – an automated investment platform for US MPL loans.

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by Diana Asatryan

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