reQuid promises to repay investors by February 2022, despite the failure of additional Agro investments
reQuid promises to repay investors by February 2022, despite the failure of additional Agro investments
reQuid, the embattled agro investment platform, has promised to pay returns on all investments made on its platform by February 2022.
In an interview with Technext, a company spokesperson revealed this new development. According to the source, affected investors have been informed of payment schedules, which will be completed within three to eight months.
In May, the agritech startup was accused by enraged investors of failing to settle capital and returns on farm ventures with which they partnered on the platform.
In response to the charge, reQuid acknowledged that some payments were delayed as a result of a series of adverse events surrounding the pandemic, which resulted in partner defaults.
It did, however, assure investors that they would receive all of their returns.
‘We haven’t received payment yet’- investors
Following up a few months after the initial promise, it was discovered that several investors were still owed money. Irene claims that she has only been able to recoup 30% of the capital she invested on reQuid for rice.
Additionally, she stated that reQuid notified investors that they have retained a legal team to assist them in recouping funds from Novus Agro (the rice project's original owners) while pursuing alternative financing to refund them.
“They sent a message informing us that they have retained a legal team to assist in recouping our funds and are pursuing alternative financing to refund us. They are stating that if we wish to be co-plaintiffs, we must complete a form.”
Another investor on Nairaland who goes by the moniker 'Tender' also claimed he has not been compensated in any way for his JV rice investment on the platform.
However, a reQuid spokesperson denied the charge, telling this correspondent that the company adhered to the payment schedule communicated to investors despite not receiving the anticipated payments.
While we were unable to confirm whether rice investment payments were made, we were able to confirm that reQuid made several payments. On June 22nd, a reQuid investor identified as Sanerugwei confirmed that he received payment for Farmsponsor's investment.
A review of reQuid's portfolio reveals that Farmsponsor Poultry 22 has been marked as paid. The payment was due on May 24th but was most likely made in June, as Sanerugwei reported.
More reQuid investments fail
The most concerning finding of our investigation is that more investments are failing while existing defaults remain unresolved.
reQuid disclosed in May that five significant partners, including Groupfarma and Novus, had defaulted for a variety of reasons.
Investors recently disclosed that additional investment schemes on the platform have defaulted. According to an investor, his investment in Greenfold Snail farm matured on May 31st, 2021.
Dennis Maria, another investor, stated that his investment in Greenfold goat farm matured on June 30th, but he has not yet received payment. Joey, another user, revealed that a friend made a similar investment and has yet to receive payment.
reQuid confirmed to this correspondent that several other agribusinesses have failed to meet payment obligations, resulting in investor payments being delayed.
According to the spokesperson, Groupfarma, one of the defaulters, applied for and received funding from the Central Bank of Nigeria (CBN) for a new planting season. As a result, they are already in discussions with investors about a payment plan.
Another partner, Abadini, is said to have communicated a revised payment schedule following its failure to meet payment obligations for the Rice Paddy aggregation project. According to the company, the delay was caused by a sharp increase in the cost of rice paddy (seed) and unstable foreign exchange policies that affected their importation.
Farmsponsor, the company's latest defaulter, appears to have taken a bad bet on investor returns. According to reQuid, the agribusiness attributed the three-month delay in its poultry investments to a Securities and Exchange Commission restriction on crowdfunding (SEC). reQuid, on the other hand, asserts that it disagrees with Farmsponsor's justification.
According to reQuid's findings, Farmsponsor used investor funds to expand its operations.
“More recently, Farmsponsor announced a three-month delay in the implementation of their poultry investments. While they claim that the SEC's restriction on crowdfunding has impacted their liquidity, we believe that in an attempt to expand their operations, they invested in more infrastructure than necessary in the hope of still raising funds from the crowd for operational costs.”
Despite the increased defaults, a spokesperson for reQuid expressed confidence in the platform's ability to pay investors for all projects. “We have communicated the adjusted payment schedules for each of these projects to the respective subscribers.”
Additionally, the source stated that they are developing new procedures to mitigate the risk of future agricultural investments failing.
“While reQuid, as a crowdfunding intermediary, cannot guarantee the returns promised by issuers (fundraisers) on our platform, we are in talks with relevant institutions to further derisk agricultural investments.”
Dropping Investors confidence
Although reQuid has stated that it will repay defaulted investments through payment schedules, several investors are skeptical.
Erinbola, a reQuid investor, claimed that her GroupFarma – Poultry 16 payment, which was due on April 2nd, was delayed until June 7th (more than two months), only to receive a June 8th email stating that they are still unable to recover the funds from GroupFarma without a new payment date.
Another investor, Joey, claims that the platform no longer notifies users when their investments have matured. “They're hoping you'll forget,” he continued.
In addition, he predicts that additional farms on the platform will default, as several of the embattled partners still have several other farms on the platform that are still in their infancy.
“How in the world did they continue to open farm after farm from Greenfold without exercising due diligence? There are approximately five additional farms on Greenfold that have yet to mature, and they are almost certainly defaulting on those as well.”
When asked what the company's plans are to re-establish investor confidence, the spokesperson indicated that the company has signed several significant partnerships that will be announced shortly.
Also, the source stated that the company is excited about several provisions in the SEC's Crowdfunding Rule, which requires issuers to be more transparent and provide investors with relevant information to help them make more informed decisions.
In Conclusion
Despite reQuid's assurances of repayment, investors' primary concern is recouping investments, not making promises—as demonstrated by the similar Thrive Agric debacle.
Additionally, the revelations from the ongoing Agri industry scandal highlight a massive issue that, if not addressed quickly, could set the budding industry back years.
The new SEC license and incubator for investment platforms appear to be a good start for the industry, but more needs to be done to protect subscribers' investments beyond the incubator.
reQuid, for its part, has announced that it will seek an SEC Crowdfunding license and will also modify its business model to better protect its users.
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