Acquisition of stock/commodities under costs of production from distressed/bankrupted companies. Secured by 1st hand collateral on acquired assets

Bedarf:379 120.51€
Min.:0.00€
Zinssatz:25%fixed // total expected return including upside from deal profit in range 35%-60%
Zeitraum:12 Monate
Dieses Darlehen ist mit einer Crowdestor-Rückkaufgarantie ausgestattet.
Ziel: 600 000€
Mindest. Ziel: 100 000€
Öffnet: 2020/09/14
Läuft ab: 2020/10/15
Art: Financing
Lage: EU
Investoren: 691

Summary

Current investment opportunity offers CROWDESTOR investors to make a secured loan with a fixed annual interest rate of 25% and an additional success fee to acquire stock of mink fur units from distressed/bankrupted companies for a price under production costs.

While the industry has been hit heavily and numerous auctions have been postponed, many farmers are out of working capital and have no access to it, in order to keep production in place, many companies have to sell out stock of assets.

The target purchase price is 50-70% under market value today.  Benchmark/maximum purchase price per 1 unit is 12 EUR. The market value today is 22.7 EUR while the average price in the last 10 years has been 37.2 EUR.

With the low supply and steady recovery of the economy, the price of the fur commodity is expected to rise. Thus, the investment opportunity is to buy the commodity at a discount price, hold for 1-1.5 years, and sell it at the maximum available prices.

The loan term is 12 months. If half of the loan is repaid, Borrower has rights to prolong the repayment of the other half of the loan for another 6 months in case market data shows that there could be a price increase for the asset in auctions and all parties would benefit economically. CROWDESTOR has to give written approval for such prolonging.

More detailed information about the Project available in annex.

Loan 

Minimum target: EUR 100 000,00 
Maximum target: EUR 600 000,00 
Loan term: 12 months 
Interest rate: 25 % per annum fixed // total expected return including upside from deal profit in range 35%-60
Interest payments:  paid in bullet payment together with the Loan principal repayment 
Loan repayment: In full at the end of the Loan Term 
CROWDESTOR Provision fund: Yes 
Collateral: Loan is secured with 1st hand collateral on the assets acquired

The project

The acquisition price is in a range of 7-12 EUR per unit which is 50-70% under the current market price in the last auctions. In calculations for the success fee, a benchmark price of 12 EUR will be used per 1 unit. 

The current market price of 22.7 EUR in the last auctions during the COVID period is very close to its historical minimum during the last 40 years. The current price is 40% under the average price in the last 10 years.

In 2021/2022 the production is expected to decline to around 10 million units per year in the world,  which is 2 times lower than in 2020 and 4-5 times lower than the average production amount in the last 10 years. The low amount of supply is expected to increase the prices.

The Borrower has offers from the commodity producers and holders. The average buying price is estimated in a range of 7 - 12 EUR. The Benchmark price is set at 12 EUR per unit,  meaning - if the Borrower pays more for each unit, he will have an obligation to pay to CROWDESTOR success fee from a number of total units as it would be if the Borrower would have paid 12 EUR for each unit. If the Borrower pays less, it will be its financial upside, and the CROWDESTOR success fee will also be calculated from a number of furs as it would be if the Borrower would have paid 12 EUR for each unit.

After the purchase, all the auctions will be followed and expected to sell starting from the beginning of 2021 since in this timespan the price is expected to grow.

If the price per 1 skin will reach the price level of:

  • 15 EUR, which is break-even price, loan in full amount with 25% annual interest on top will be paid back to investors. No success fee will be paid to investors. 15 EUR per unit is a price level that has never been experienced in the last decades. The total return will be 25% per year.
  • 37.2 EUR, the average price in 10 years, the total return for investors will be 45% per year.
  • 84.8 EUR, the maximum price in 10 years, the total return for investors will be 112% per year.

Market Description

The fur trading business is among the oldest in the world. While the first official auction houses appeared in the 19th century, the origins of organized activity can be traced back to the 16th century The largest commodity in the fur market is mink. It constitutes more than 95% of fur capitalization. Mink is a generally accepted commodity with its main characteristics: male/female, size, and color. In 2020 the market is estimated to turnaround 24 million units with a capitalization of 720 million USD. As of 2019, the largest auction houses in Europe - Kopenhagen Fur, Saga Furs, Sojuzpushnina - have combined Revenues of 1+ billion EUR. 

Most of the fur production companies work on the advance payments received from previously mentioned Auction houses, however, since the beginning of 2020, Auction houses have stopped funding creating an unprecedented situation in the market - none of the market participants has access to funding, many are stopping activities. In order to partly save production, companies are forced to sell assets with discounts. With the low supply and steady recovery of the economy, the price of the fur commodity is expected to rise. Thus, the investment opportunity is to buy the commodity at a discount price, hold for 1-1.5 years, and sell it at the maximum available prices.

Table of Target Profitability

Annex

  • Presentation about the project

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