THE CREDIT RATING AGENCY FOR SME
First credit rating agency specialised in SMEs in Europe ‘WE DEMOCRATIZE CREDIT RATING’
INBONISRATING is the first Credit Rating Agency specialized in rating SMEs registered by the European Securities and Markets Authority (ESMA) INBONISRATING issues robust SME and independent credit ratings of SMEs with annual revenues REVENUES FINANCIAL DEBT between 5 and 50 million euros and a financial debt of 0.5 to 10 5M€ 50M€ 0,5M€ 10M€ million euros. SME rating coverage is provided in all sectors with the exception of that of INDEPENDENCE financial institutions and PROVEN SME SPECIFIC AND OBJECTIVITY insurance companies. RATING IN ACCORDANCE METHODOLOGY WITH EUROPEAN REGULATION REGULATION
WHAT IS A CREDIT RATING? A credit rating is an independent expert opinion on a company's ability to meet its financial obligations issued by qualified analysts according to a proven methodology.
In Europe, only ESMA-accredited rating agencies can issue ratings. INBONISRATING can operate in any country of the European Union. It is currently providing coverage in France and Spain.
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AAA 1/9 Private Credit Rating Report Issued and destinated exclusively to Entrepreneur Venture THE CREDIT RATING AGENCY FOR SME SME CREDIT AA SMARTRENTING June 2019 QUALITY Company presentation AAA Created in 2015, Smartrenting is a start-up rental management agency acting as an intermediate between young professionals AA willing to cover their monthly rent while away for a few months, and young people looking for a short term stay (medium renting time, 4 days). The firm also covers all the administration, logistics… related to renting the apartment in platforms such as Airbnb A (55% sales) and Booking.com (40% sales). BBB A The company, currently present in six French cities, is proving its scalability through its recent expansion to 5 new cities in 2 years, RATING by centralising its permanent costs and know-how in its headquarters in Paris (69% of Smartrenting’s sales). This allows the firm BB to control its variable costs according to different opportunities/risks, and therefore creates this scalable business model. All this B B has enabled the company to experience a 255% sales growth in its first three years of activity (2016-2018). The Group is managed by its three co-founders and main stockholders: Thibault Martin (CEO; 29% shareholding), Romain CCC Bernard (COO; 29%) and Théo Vassoux (CSO; 25%), as well as several Investment Funds (17%): Club Invest IDF, Welikestartup, Investessor, Val’Angels and Cèdre Participations. It is formed by 4 subsidiaries: SmartRenting Paris, Lyon, Bordeaux and Nantes, CC all 100% owned by SmartRenting. § Today Smartrenting has more than 500 apartments under management and 30 employees. C Smartrenting has called upon Entrepreneur Venture (EV) for an investment of 3 M€ in this context of strong development, taking D advantage of the extraordinary growth of the sector, with the aim of: opening new cities (in France and Europe); developing a BBB B2B2C strategy (schools, companies, agencies); and investing in R&D to improve their platform, optimize their management and continue advancing their business. PRIVATE Explanatory factors for the evaluation The B rating obtained by Smartrenting represents our perception of 12-month credit risk. This note includes the positive effect of the subscription of €3 million in 60% equity and 40% convertible bonds, taking into account its foreseeable and immediate realization (July 31, 2019). Evolution Thanks to the growth of the short term accommodation sector in France, not only for tourists but also for young professionals and students, and despite the growing competition in the sector, the firm has been able to position itself as a key player in its BB niche market of 18-30 year olds through the implementation of annual exclusive partnerships with several universities and student’s associations, which could provide them with a market entry barrier. AAA AA The company's business model, although recent (only 3 full years of activity) and under the management of its three young A co-founders, has proven to be efficient so far, thanks to the positive results obtained by its highly results-oriented and BBB well-structured management team. B BB B However, a change in the current competitive situation, particularly given their present dependence on large reserve platforms CCC (Airbnb, Booking, etc.), and if Airbnb, following the acquisition of Luckey Homes, were to become a direct competitor, could CC jeopardize Smartrenting’s business model, and the rating could also be significantly deteriorated. Similarly, a tightening of the C constantly evolving restrictive local regulations could affect the growth model and lower the rating. All these factors seem, D 9 EXPLANATORY nevertheless, to be permanently supervised by the company. First, through bimonthly meetings with Airbnb; and secondly, by the JUN-2019 JUN-2020 B stress tests conducted on their turnover forecasts. As for the company’s financial state, it is currently in a position of need of improvement, given 2018’s negative net result of -0.7 M€. These negative margins (EBITDA of -20% in 2018) have been obtained, however, for the first time since Smartrenting’s creation, and in the context of a growing start-up momentum. With an average 250% annual activity growth and a still positive level of liquidity, PAGES PREPARED the firm presents a promising development. Nonetheless, the company's balance sheet remains modest, with 1 M€ in assets, which together with the negative net profit obtained, resulted in a negative shareholder’s equity of -0.1 M€ at the end of 2018. The firm’s BP estimates that Smartrenting will be present in more than 22 new cities by 2022, when their apartment management portfolio is expected cover more than 2,700 properties. The company forecasts an activity annual average growth of around 160% for the following three years, and to start obtaining positive margins from 2020 onwards. Once the contribution of new investors (3 M€ in equity and semi-equity, convertible bonds) has materialized, Smartrenting will BY EXPERT obtain a strong financial support and additional credibility to accomplish its objectives. The structure designed for the convertible Rating Analyst CCC bonds (5 years maturity) offers a stable duration to achieve this . The company's balance sheet would increase with this injection María Cid of funds from €1 million at the end of 2018 to around €4 million in the course of 2019. [email protected] The occurrence of any event that could make the convertibles payable (breach of commitments with EV, incidence of payment, etc.), would likely result in a significant downgrade of the rating. For the next 12 months we consider this risk unlikely. Head of Rating ANALYSTS Therefore, the medium to long-term sustainability of the company will depend on the achievement of the growth and cash generation Antonio Alcalde objectives of the business plan and the successful circumvention of regulatory and competitive threats that affect the sector. [email protected] Typology of the main risks analysed
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Inbonis is registered as a Credit Rating Agencies by ESMA (European Securities and Markets Authority) in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009.
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