Indonesian P2P platform iGrow's growing pains

In The Top Up this week, we look at the options available in the world of alternative investments. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. Written by Simon Huang Journalist Hello {NAME} Investors today have countless opportunities to grow their wealth. From the safety of [Singapore Savings Bonds]( to the thrill of a high-growth tech company like Tesla, investors can build a portfolio that best suits their needs and appetite for risk. For those who find stocks and bonds too mainstream, there are options like iGrow, an Indonesian peer-to-peer lending platform that connects investors with capital to farmers who need it. The company is offering returns of 12% to 18% for each project, which seems like a tantalizing prospect compared to other options. Yet, investing in such projects very often comes with a huge caveat emptor - buyer beware - warning. Thousands of lenders on the iGrow platform are facing delays in receiving their investment returns, as my colleague Budi translates in this week’s Big Story. According to Indonesian authorities, the risk of bad loans is borne by the lenders and not the middleman platforms. Indeed, that is the whole point of the peer-to-peer model. However, in this environment, lenders will need to exercise a high degree of prudence and caution. For the more adventurous, alternative assets such as agriculture are becoming increasingly popular and accessible to retail investors. In turn, platforms like ADDX have sprung up, promising individual investors access to assets like hedge funds and private equity that were previously only available to large institutions and ultra-high-net-worth individuals. This is a trend I look at in this week’s Hot Take. -- Simon  --------------------------------------------------------------- THE BIG STORY [iGrow's sprouting credit issues discredit P2P investors]( The Indonesian peer-to-peer lender’s payment success rate has been steadily declining since 2022.  --------------------------------------------------------------- THE HOT TAKE Tokenized version of a hedge fund on ADDX Here’s what happened: - Private markets exchange [ADDX]( has [listed]( Asia Genesis, a macro hedge fund, on its platform. - The fund aims to provide investors with “consistent, positive, and uncorrelated returns” across bull, bear, and range markets. - Around 60% to 70% of the fund is exposed to Asia and US equities, with the remaining exposure going to interest rates and currencies. Here’s our take: For many years, dovish central banks meant that the 60/40 stock and bond portfolio provided steady returns for most investors. Since the global financial crisis, this mixture of US stocks and bonds delivered an average annual return of [11.5%](. However, 2022 was a challenging year, with the 60/40 portfolio [declining 20%](. Institutional investors have long sought exposure to other asset classes beyond equities and bonds such as hedge funds, private equity, infrastructure, and real estate. These asset classes generally trade liquidity off for higher or more stable returns, or offer returns that are less correlated to the market. For a long time, such investment options were only available to large institutions (such as pension funds and endowments) or ultra high-net-worth individuals. For example, the usual minimum ticket size to invest directly in Asia Genesis would be US$1 million. Platforms like ADDX have changed that. With its blockchain and smart contract technology that fractionalizes investments, for instance, investors can access the Asia Genesis fund for as little as US$20,000. But this is still not for the man on the street - only [accredited investors]( can access the ADDX platform. In the past few years, private equity and hedge funds have looked to [wealthy retail investors]( as a new source of capital to grow their assets under management. Platforms like ADDX and Moonfare can play a key role in this initiative by serving as the middlemen between these investors and alternative asset managers. However, with high-earning white collar workers in tech and finance facing job insecurity in the current market, will there be sufficient demand for these products? US private equity powerhouse Blackstone recently faced scrutiny after it had to limit redemptions from its Blackstone Real Estate Income Fund. These redemptions were said to come primarily from [Asian investors who had margin debt]( and were looking for liquidity where they could find it. As it seems, demand for such products may take a hit amid higher investor caution and a preference for cash. However, in the longer term, the macroeconomic picture will stabilize. The overall prognosis for private markets remains healthy. Morgan Stanley expects private capital markets to see a [12% compound annual growth rate]( over the next five years. ADDX and its ilk, which are laying the groundwork now, will be able to take advantage of these long-term tailwinds. -- Simon --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [China-based insurtech firm lists on Nasdaq]( Cheche Technology, which focuses on property and casualty insurance, expects annual revenue for 2022 to reach US$360 million. 2️⃣ [Stripe may go public next year, allows exit for investors and employees]( The fintech major recently pegged its valuation at US$63 billion, down from US$95 billion in 2021. 3️⃣ [Indonesian POS startup bags $12m in Intudo-led series B round]( Founded in 2016, iSeller’s services enable business owners to manage sales and operations. 4️⃣ [Flywire gets green light for SG operations]( With its in-principle approval for a major payment institution license, the Temasek-backed company will be able to offer domestic money transfer, merchant acquisition, and cross-border money transfer services in the city-state.  --------------------------------------------------------------- That’s it for this edition - we hope you liked it! 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