Agricultural finance platform offers up to 13pc returns
Economic conditions are deteriorating across Europe, while rising mortgage rates are set to dampen the property market. Investors looking to shore up their portfolio away from the volatility of the stock market now have a challenge on their hands.
This is where Lande Finance comes in. Launched in 2019, the Latvia-headquartered peer-to-peer lending platform specialises in agricultural finance. European investors, including those from the UK, can lend to small- and medium-sized (SME) farmers, with the loans secured against collateral such as land, grain or machinery.
This is an ethical investment product that provides much-needed finance to Europe’s farmers, while offering investors sensible portfolio diversification and inflation-beating returns of up to 13 per cent.
Read more: Farmers are increasingly looking to alternative finance
“When we analysed the market, we saw that there are many real estate platforms and payday lenders but we thought that P2P investors may like a new product and asset class,” says Nikita Goncars, chief executive at Lande Finance.
“It’s a different part of the economy. Grain and agriculture are a basic human need. While property deals may slow down during the crisis, you can’t delay food intake.”
The war in Ukraine has caused the price of fertiliser, fuel and grain to surge, which has created a mammoth challenge for Europe’s farmers.
“As a result of higher prices, farmers need additional working capital to start the season,” says Goncars. “One of the products we are implementing is called ‘buy now, pay at harvest’ – it’s a little like ‘buy now, pay later’, whereby farmers can obtain finance from us to buy their fertiliser at the start of the season and then repay us when they’ve sold the grains.”
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This means that investors can do social good while earning bumper returns.
“There was a huge report commissioned by the European Investment Bank on creditworthy SME farmers which showed they are underfinanced by €46bn (£39.8bn),” Goncars explains.
“Banks cannot fill this funding gap even if they wanted to due to stricter regulations following the 2008/9 financial crisis, so it is down to the crowdfunding sector to solve this issue.”
Lande Finance attracts investors from all over Europe, including the UK. In fact, two of the platform’s five largest high-net-worth investors come from the UK, despite the company never having marketed itself in the country to date.
Read more: Over half of P2P investors consider ESG when investing in the sector
Anyone can invest in Lande Finance, with a minimum threshold of just €50, although the average investment size tends to be around €3,000.
Impressively, Lande Finance has been profitable from the start and used the proceeds from its lending activities to build its platform. It has now raised additional equity funding from angel investors to expand into other countries.
It has identified 12 potential markets in Europe for its growth plans, with Romania first on the list for a launch in the spring.
Investors can be further reassured by the fact that Lande Finance has received the very top rating from UK-based P2P ratings and research firm 4th Way.
4th Way heralded the platform’s high cover against losses, particularly given the high interest rates on offer.
“This is a huge responsibility for us but we appreciate it,” says Goncars.
