EvoEstate Originators Rating is a model that assigns risk ratings for the project originators that are offering investment opportunities on EvoEstate. The EvoEstate Originators Rating is represented on a scale ranging from "A+" to "D", representing the highest possible value and the lowest respectively.
It’s important to note that the rating does not analyze the individual investment opportunities, but the environment in which the investments are structured. The EvoEstate rating is informative only and cannot be considered investment advice.
The rating is based on factual data, which answers some questions and assigns a weight and rating for each originator. The assessment methodology is divided into three main classes: operating environment, risk appetite and financial profile. Later two different risk scorings are based on the business model of the platform for buy to let investments and loan originators (applies to both fixed-interest and profit participatory-equity loans).
Buy to let
30.5% Operating environment
28.5% Operating environment
39% Risk appetite
43% Risk appetite
30.5% Financial profile
28.5% Financial profile
The quality of regulations and the presence of the relevant financial services license. Effective regulatory institutions and law enforcement are viewed positively. The absence of relevant regulation is a negative factor that imposes a higher risk of the investments. Payments collection structure as well as an implemented continuity plan with assigned budget results in a lower risk.
Assessment of underwriting standards of the documentation criteria and their application during the scoring process. Application of internal or external risk controls, usage of collateral agents, escrow accounts and special purpose vehicles (SPVs) is a positive factor. The track record for executed previous loans without defaults or with a full recovery of capital is a positive factor. Delayed payments and late principal repayments are a negative factor.
Assessment of financial stability of the company, external shareholders and access to capital. Large institutional investors (shareholders) such as Banks or established Venture Capital funds are viewed positively. Positive cash-flow, reasonable monthly operational expenditures and longer experience operating in the market is a positive indicator. High monthly expenditures with non-existing external institutional investors is a negative factor.
Lack of measures implemented to control potential conflict of interest and untransparent financials or past loan performance.
The EvoEstate Originators Rating is of an informative nature only and can not be considered investment advice. Each investor should analyze each project carefully and only then make an investment decision based solely on his analysis.