Food producer funding platform PrimeStox has halted plans to partner with a peer-to-peer lender and is now focusing on getting its current loans repaid, its founder has revealed.
The platform, founded by mining and metals analyst Joseph Cherrez and horticulturist Jenny Louw, allows retail investors to support food producers by funding production of their goods and sharing in the profits once they are sold. Cherrez told Peer2Peer Finance News last year that a food wholesaler or P2P platform may be a good partner for PrimeStox as it seeks to grow.
But he said his focus has now shifted and a partnership may not be appropriate. He said PrimeStox investors backed £1.1m of loans between 2017 and 2018 but it made only two loans last year due to a lack of good-quality opportunities. It now has only one loan outstanding with a default rate across the whole loanbook of 6.5 per cent but annual returns of 15 per cent.
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“Unlike most players in the sector who have high fixed costs and domineering shareholders seeking growth at all costs, PrimeStox did not have to push itself too hard and make tens of millions of pounds of loans a month,” he said.
“Instead it could take time and choose quality credit with counter-parties who we knew and trusted. We believe this has been the key differentiator and why investors have remained supportive.
“If we restart lending in 2020 it will be under our own steam and to take advantage of a potential market opportunity which we see in front of us. “We will not make any hasty or inappropriate partnerships to prop ourselves up when we have proven that our model works and we can stand alone.”
He insisted there is still a market for his product as producers are in need of funding due to the market disruption from Covid-19 and there is strong demand for food deliveries amid the pandemic.