Blue Elephant Capital Management has embarked on an assertive growth plan
Blue Elephant Capital Management has embarked on an assertive growth plan

Blue Elephant enters New Zealand in P2P partnership with Harmoney

Irvington, New York-based Blue Elephant Capital Management has gone global following their investment of $50 million with Harmoney, New Zealand’s only licensed peer-to-peer lending platform.

Blue Elephant becomes the first institutional funder of a New Zealand P2P.

New Zealand was a great country to invest in, Blue Elephant Managing Partner Brian Weinstein explained.

“One question you have to ask is whether or not there is a need.  Is it filling a hole?  Because if it isn’t no one will care.”

Blue Elephant Capital Management has invested in New Zealand's P2P industry
Blue Elephant Capital Management has
invested in New Zealand’s P2P industry

Blue Elephant found a definite need and a strong opportunity.

“There are few major banks in New Zealand so the competition’s not strong,” Mr. Weinstein discovered. “Yet their credit card interest rates are in the mid-20s, so we could offer a lower rate while still providing a good investment income.  All the boxes were checked, so we knew it was a good investment.”

Blue Elephant was equally impressed with Harmoney, who came to Blue Elephant’s attention from a tip provided by a friend familiar with the company.

“We like their underwriting capability and their due diligence was good,” Mr. Weinstein said.

Blue Elephant’s due diligence wasn’t bad either.

“Blue Elephant completed background checks and employed local advisers to ensure that Harmoney was operating at global benchmark,” Harmoney Founder and CEO Neil Roberts said.

Harmoney’s credibility was further enhanced by a strong advisory board which includes Charles Moldow.

“Harmoney has been fortunate enough to have attracted a wide and top notch group of advisers,” Mr. Roberts acknowledged.  “They are all involved with USA and UK platforms.”

Mr. Roberts said Harmoney was ready for the challenges and opportunities of working in the international sphere.

“The Harmoney team set out to prove or disprove global underwriting and risk alignment cross border. Our finding proved that you could underwrite credit from a central spot globally and therefore apply a standard matrix of risk and risk pricing. In other words as an investor your could see the risk and return of a deal in Thailand, Crystal Palace and Idaho and clearly identify the better deal in which to invest.”

Harmoney’s efforts led to a stage appearance at the Lendit conference in San Francisco and their first meeting with Blue Elephant.

Harmoney is New Zealand's first peer-to-peer lender
Harmoney is New Zealand’s
first peer-to-peer lender

Both Mr. Weinstein and Mr. Roberts spoke about changes to New Zealand law which made the partnership come together much more easily.

 “The New Zealand government has a very proactive approach,” Mr. Weinstein said.  “They enacted a number of legislative changes so credit would flow away from banks and not be as aggregated in the big institutions.”

“New Zealand is perhaps the first country in the world to take advantage of a once-in-a-lifetime opportunity of the overhaul of securities law to empower challenger models to free up capital markets,” Mr. Roberts explained. “Before April 1, 2014 the laws were draconian and P2P lending was almost impossible to do. Now we have specific provisions at law that, under very strict licensing conditions and regulatory control, provide the backbone from which to operate the platform.”

While we said the road was easier, it still involved understanding new cultures and mindsets.

 “We spent some time looking at legal requirements in New Zealand,” Mr. Weinstein recalled.  “It takes time to understand who is protected by which laws, so we hired a New Zealand law firm to work with us.  Data’s data, but understanding people can take some time.”

There were some differences between the average New Zealander and the average American. Given how high some of the borrowing rates are, many people do not know their credit score.

“They’re not as fixated on it.” Mr. Weinstein discovered.

Mr. Roberts felt the fact the two companies were at similar development points contributed to the strong synergy between the two.

“Like us they were a team that is very strong, with great track and domain knowledge, just starting our but with aggressive growth plans.”

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