Friday, June 21, 2024

Real estate crowdfunding investment firm Monific gets Fintech Law approval

The National Banking and Stock Commission (CNBV) last week authorized crowdfunding real estate investment platform Monific to operate as a Collective Financing Institution (IFC) under the Law to Regulate Financial Technology Institutions, also known as the Fintech Law.

The Fintech Law, passed in 2018, seeks to regulate the fintech market in Mexico and reduce the amount of cash in circulation in order to curtail money laundering and corruption, as well as bring more people into the formal economy.

The law required such companies to seek approval by the CNBV to operate in Mexico after it took effect. However, Monific — along with other fintech companies that existed before the law was passed — was allowed to continue operating as long as it applied to become a government-approved IFC.

That application process came to an end at the most recent meeting of the Inter-Institutional Committee, which is made up of authorities from the CNBV, the Ministry of Finance and the Bank of Mexico.

Mozper, an unrelated pay card and app that helps parents manage their kids’ weekly allowance, also got a license to operate. Both are the first fintech platforms to be authorized in 2023. 

Monific was founded in 2018 by David Agmon Mizrahi and Ted Senado Sacal. (Monific)

Founded in 2018, Monific is a platform that raises relatively small amounts of capital from multiple investors to fund real estate development projects — in Monific’s case, in the tourism industry. Investments can start at $1,000 pesos (US $52) “with an average annual return of 12% to 15%,” the firm told El Economista.

To date, Monific has crowdfunded 12 developments in the Riviera Maya, Bacalar, San Miguel de Allende and Mexico City. It plans to seek funding for six more tourist destination projects worth over 70 million pesos. 

Last year was not a good one for real estate crowdfunding in general — due to the world’s uncertain climate, Simon Dalgleish, managing director of the crowdfunding real estate platform M2Crowd told the newspaper El Financiero. In December, he said his platform would miss its funding target for the year by as much as 33%.

“We did not break a record, it was not the best year. From what I have heard from other platforms, yes, it is a bit of the environment, there is a lot of uncertainty, among other factors that are happening in the world, inflation, interest rate hikes, the war in Ukraine, oil prices, ” Dalgleish said.

But Monific’s Agmon said crowdfunding investment in the tourism real estate industry was the exception to 2022’s trend. 

The Mexican tourism industry’s post-pandemic recovery boosted crowdfunding investment in hotels, rest houses, tourism-related businesses and short-term rentals, he said. The arrival of digital nomads and the home-office trend in Mexico also helped make such investments attractive. Monific’s number of investors increased from 20,000 to 30,000 in one year, he said.

Thanks to that increase, Monific raised 80 million pesos in investment funds for development projects in 2022, Agmon said in late December, compared to 50 million pesos in 2021.

However, he did acknowledge some harder times ahead. 

In the last three months of 2022, the firm saw its investment amount per customer decrease by about 30%, Agmon said, blaming it on the Bank of Mexico raising the interest rate throughout most of 2022. It’s currently at 10.5%.

That, he said, “has hit us on the amount of investment, but it’s temporary,” and expressed confidence that the demand for short-term rentals like Airbnb will continue to allow Monific to raise capital.

With reports from El Economista, El Financiero, Custom Market Insights

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