Zagga’s Secondary Market
The secondary market enables investors to sell all or part of their investment in a loan originated on our platform that has been approved by Zagga for listing on the secondary market.
A secondary market license gives investors the potential for liquidity, while also offering other investors the opportunity to invest in secondary market loans, which will have a track record of performance and a shorter loan term.
In simple terms, any investor who is currently invested in a loan and who may require some or all of their capital back in advance of the loan maturing, can “sell” their investment commitment on the secondary market to other willing investors.
Other investors(s) can then opt to take all or some of that loan for the remainder of the term.
These Secondary Market Rules, the Disclosure Agreement, Investor Agreement, Declaration of Trust and our other legally binding documents (are available on our website; https://www.zagga.co.nz/about/legal) govern how this secondary market operates.
FAQ's - Selling an investment commitment on the secondary market
Which of my Zagga investments can be sold on the secondary market?
Any Zagga investment can be sold, provided it fits within the secondary market rules, including that the loan term is not within two months of the scheduled repayment date, or currently in default. You can choose to list an investment on the secondary market for a maximum period of seven days.
Can I sell part of my Zagga investment?
Yes, you can see any amount of your investment, from $1,000 up to the full commitment amount. This means, if you have multiple Zagga investments, you could choose to sell a portion of each.
Are there any fees to sell investments on the secondary market?
There is a Break Administration Fee, as set out in the table below (but subject to change).
|Loan Amount Sold||Break Administration Fee|
|$1,000 - $4,999.99||$75|
|$5,000 - $19,999.99||$125|
|$20,000 - $99,999.99||$200|
What happens if no new investors take up my investment break amount on the secondary market?
If no new investors fulfil your investment break amount, then you are still subject to remain in the loan for the rest of the loan duration. At this stage, you can choose to extend your listing, provided there are no other investors in the queue waiting to sell.
What happens if investors only take up some of my investment break amount?
You can choose to take the amount of commitment already obtained. Your break administration fee will be based on the actual amount sold. Alternatively, as long as no other investor is in the queue (see FAQ below), you can choose to extend your listing by either 3 or 7 days.
Can multiple investors in the same loan, sell their investment commitment on the secondary market?
Yes, but not at the same time. If while a loan is being listed as a secondary market loan another investor in that loan also attempts to sell a piece of the loan they will be put into the queue. This will be made evident by virtue of the listing dates of the new selling investor choosing 3 days or 7 days from the closing date of the current selling investor. If a third investor then also attempted to sell part of the same loan, they would be provided with dates 3 or 7 days behind the closing date of the second selling investor, and so on.
Can I set the terms of my investment listed on the secondary market?
No, the original terms agreed to as part of the investment commitment will remain the same, including the interest rate and the underlying security. The only features of the loan which are subject to change on the secondary market are the remaining time left on the term of the loan and possibly the LVR, depending on the loan type (i.e. for construction loans, the LVR often decreased during the course of the loan depending on construction progress, therefore increasing the security).
If I sell all or part of my investment on the secondary, how will I receive my funds?
Once a secondary market loan has been purchased, the purchasing investor(s) will be directed to make their investment transfer to the Magna Trust Company Limited’s Commercial Trust Account. These will then be transferred to you as the selling investor, and you will be removed from the loan pool.
Please note, your break fee will be deducted, therefore you will receive in your account your investment sold less your allocated break fee
FAQ's - Buying investments on the secondary market
What are the benefits of purchasing loans on the secondary market?
Investors may choose to purchase loans on the secondary market for a number of reasons, including a lesser loan term, a proven track record of repayments and progress on a loan by the borrower or preferential loan terms (e.g. interest rate) which may not currently be available on a new investment.
How can I tell secondary market investments apart from new investments?
Secondary market loans will be clearly displayed on the Zagga website; they will have a different banner colour to original loans and will be marked as a “SECONDARY MARKET”.
How can I tell whether a secondary market loan is a performing loan?
In addition to the standard loan disclosure provided by Zagga (i.e. loan summary, loan conditions, details of the security held, borrower’s credit score, loan to value ratio, etc) potential purchasers of existing loans will also be able to view full details of the loan’s performance (i.e. number of repayments, any late payments or other credit events).
Zagga will reassess a loan before listing on the secondary market if we believe the performance of the loan has not been satisfactory. This may include a new credit assessment, which will be made evident on the secondary market listing. If a credit event has been identified but the loan is still deemed creditworthy, this will be made evident upon listing on the secondary market.
Can I negotiate the loan terms with the selling investor before purchasing a secondary market loan?
Yes, as long as the secondary investment has not been fully funded and it has not reached the end of the listing period (3 or 7 days). It should also be noted that, as with any Zagga investment, a purchasing investor can elect to ‘gazump’ any other potential purchasers, taking the entirety of the loan. You would also then lose your commitment in that investment.
Secondary market effects on the borrower
- The sale and transfer of an investment in a loan on the secondary market will not incur any costs or fees to the borrower.
- Zagga will make no disclosure of any change in the beneficial interest of any part of a loan to the borrower. Borrowers will not be notified of their loan (or a portion of their loan) being made available on the secondary market.
- By agreeing to the Zagga Disclosure Statement and Borrower Agreement, borrowers acknowledge and accept that borrower identity information may be available to registered investors both prior to successfully funding their loan and during the loan term through the secondary market.
- If an investor wishes to break their investment amount early (i.e. before the loan period is due to expire), they can apply to do this through our secondary market. If approved by Zagga, and successful in finding new investors to take up the investment amount, the original investor will be able to be swapped out of the loan pool for the new one. In this scenario, this would make no difference to you as a borrower and your borrower conditions of the loan. If no new investors take up the investment amount into your loan, the original investor will be required to keep their investment in your loan for the remaining duration of the loan term.