German FinTech startup Acatus is on a mission to modernise the way banks can finance loans to grow their business. It just raised €5.5m in Series A round to make it happen.
Venture capital firms DIP Capital LLP and coparion led the round that also saw the participation of existing shareholders Partech, Berliner Effektengesellschaft AG and Berliner Volksbank Ventures.
“We have a lot of banks [or originators] and alternative asset providers in the pipe which would like to connect to our platform,” Marie-Louise Seelig, CEO and co-founder of Acatus, tells FinTech Global. “The current funding provides us with the necessary means to grow on the originator side. We also would like to expand our investor placement capabilities. So, we also want to grow on the investor side, offering them different asset classes with attractive yields.”
She founded the company together with COO Daniel Wigbers (both pictured above) after she spent a decade as a financial services professional.
Seelig says that the idea came to her as she noticed how things had changed across the current 28 member states of the EU after the Great Recession of 2007 to 2009. “Banks don’t really have an efficient capital markets refinancing access for their portfolios given that traditional securitisation has significantly declined after all the problems that came with it during the financial crisis,” Seelig explains.
“This amounts to a huge problem, as banks currently have €12bn of loans sitting in their balance sheets, partially limiting them from doing new business. Investors on the other hand are desperately looking for fixed income bond investments which still generate some yield in times of negative interest rates.”
That problem is what Acatus aims to solve through its debt capital markets platform. It connects banks and investors with each other through a real-time securitisation machine and capital markets placement platform. “This way, we can create a win-win situation for both banks and investors,” she continues.
The idea is that the platform will empower financial institutions to better manage their balance sheet by getting debt capital markets access and thus generate more fees and be able to get new business.
“Investors on the other hand have an attractive investment opportunity,” Seelig says. “The idea is to provide with the Acatus debt capital markets platform the infrastructure for the European debt capital markets union, which the EU wants to build as part of the single capital markets union.”
But building a pan European debt capital markets platform is not for the faint of heart, with Seelig saying no solution like this existed before Acatus’ founders decided to act. “In the first place, we focused on building the technical infrastructure, getting the necessary licenses in place and acquiring and connecting the necessary partners to operate such a platform like e.g. Société Générale as issuing and paying agent, a Clearstream connection and of course onbaording the first customers,” she recalls.
Through the platform, Acatus has digitised all the different steps ten to 15 parties provide during a debt capital markets refinancing transaction. Moreover, the platform can transform a single asset or a portfolio of assets chosen by the investor in real time into a fully fledged fixed income bond, which the investor can select and buy directly via the platform, settled in his normal bank account.
“Given that we have digitised the whole process, we can securitise any kind of asset in real time,” Seelig says. “An investor can build his on fixed income bond according to his individual risk-return profile which is currently not possible with traditional portfolio securitisation or in the normal fixed income bond market. We can thus offer capital markets refinancing opportunities for assets which currently don’t have capital markets refinancing opportunities tailor-made.”
So with the money in the bag, what is the ultimate goal of Acatus? “We want to become the leading debt capital markets platform in Europe and thus want to be the place to go for originators like banks and alternative asset providers if they are seeking debt capital markets funding for their book,” concludes Seelig. “We want to be also the place to go for investors who are looking to get attractive yield in the form of a tradable fixed income bond which they can build a la carte, matching exactly their individual risk-return profile.”
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