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Acquisition of stock/commodities under costs of production | Security: The stock of the assets | Round 03
Open

Need: €82 497.21
Interest rate: 30%
Period: 12 months
Target: €85 000
Opens: 2022/07/22
Expires: 2022/08/22
Type: Specialized
Location: Latvia
Investments: 24

Summary

The current investment opportunity offers CROWDESTOR investors to make a secured loan with a fixed annual interest rate of 30% and an additional success fee to acquire stock of mink fur units for a price under production costs.

The target purchase price is 50-70% under market value today.  Benchmark/maximum purchase price per 1 unit is 22.5 EUR. The market value today is 36.6 EUR, while the average price in the last 10 years has been 41.8 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 the right 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.

Find the full information in the presentation attached

Loan

Borrower: UAB Eusera
Maximum target: EUR 85 000
Loan period: 12 months
Interest rate: 30% p.a.
Repayment:

Interest payments are paid in bullet payments together with the Loan principal payment at the end of the Loan term.

Security: The stock of the assets
Location: Latvia

The project

The acquisition price is in a range of 10-14 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 22.5 EUR will be used per 1 unit. 

The current market price of 36.6 EUR. The current price is 40% under the average price in the last 10 years.

In 2022/2023, the production has declined to less than 10 million units per year worldwide, 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 10 - 14 EUR. The Benchmark price is set at 22.5 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 22.5 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 22.5 EUR for each unit.

After the purchase, all the auctions will be followed and expected to sell starting from mid-2023 since, in this period, the price is expected to grow.

If the price per 1 skin reaches the price level of:

  • 40 EUR -  the total return for investors will be 38% per year.
  • 60 EUR - the total return for investors will be 47% 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 colour. In 2020 the market is estimated to turn around 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. 

In March of 2020, Auction houses stopped funding mink farms, creating an unprecedented situation in the market - all activities had stopped. Due to Covid-19, many farmers had liquidated their mink farms or could not upkeep their stock and were forced to sell their assets. Denmark ordered to liquidate all mink stock causing the price to rise significantly (Denmark is the biggest manufacturer of the highest quality mink fur in the world). Therefore the market lost one of the biggest players. On February 24th of 2022 war between Russia and Ukraine (both were also top manufacturers in the world) created another huge impact on the market - farmers in Ukraine let their stock out of cages, and Russia, affected by economic sanctions, is now limited in its international operations.

As of 2022, some of the biggest fur manufacturer countries in the world (Denmark, Russia, and Ukraine) are out of business, it is expected that fur will become more exclusive and expensive. 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

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