Exclusive: ayondo German Subsidiary Files for Insolvency

The group, which has raised S$10 million since the filing, said "deteriorating conditions" in Europe were to blame

Finance Magnates learned on Thursday that ayondo GmbH (AYG), the Frankfurt-based subsidiary of the retail trading group, has filed for insolvency.

Updates on the group’s stock exchange news feed indicate that the company, which provides social trading services, made the filings on 14th of August.

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Just over a week later, on the 22nd of August, ayondo also said that ayondo Holding AG, a Swiss subsidiary of the group and the parent company of AYG, had also filed for insolvency.

After these filings were made, AYG released a statement on its website saying that, though it had filed for insolvency, it “is not yet insolvent” and that “business operations are continuing as normal.”

The trading firm also noted that all client funds are safe.

“Deteriorating conditions”

AYG’s troubles appear to have stemmed from regulatory changes put in place by the European Securities and Markets Authority last year.

In an update on the Singapore Exchange, ayondo said that worsening conditions in the contracts-for-difference market meant their European business was no longer tenable.

“Given the deteriorating conditions of the European CFD trading market, together with the inability to initiate any marketing efforts to grow the European social trading business, the business of AYG has been on the decline since Q2 2018,” said the company in the document.

“This has led to limited revenues to cover the high operational costs.”

The company said that it had also attempted to restructure its operations in Germany, including letting some executives go, to try and turn things around. Those efforts were in vain.

“[D]espite the restructuring to reduce costs, AYG continued to shoulder liabilities which it is not able to settle without funding,” said the broker.

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“Given the [ayondo group’s] current financial position, the [ayondo group] is unable to fully pay the salaries [sic] for August 2019 and to fund the continuing operating and restructuring costs in Germany.”

For its part, AYG released a separate statement on August 14th saying that its employees’ salaries would be paid and that business would continue as usual.

“The platform developed by this fintech is very innovative,” said the firm.

“To develop such a solution requires a lot of know-how and many years of development work. We are therefore confident that we will find an investor. We have already spoken to the first interested parties.”

New investment

Despite its involvement with both ayondo Holding AG and AYG, ayondo said that it does not expect to accrue any liabilities stemming from the two companies’ insolvency filings.

AYG’s closure effectively brings an end to ayondo’s operations in Europe, with the group, having sold off its UK entity to BUX earlier this year, no longer have any active business-to-consumer dealings on the continent.

And, although the group said it did not expect to be impacted by its European businesses, it underwent another round of fundraising on August 22nd.

Regulatory filings indicate that Golden Nugget Jinzhuan, a previous investor in the firm, has put just over 9.3 million Singaporean dollars ($6.7 million) into the firm.

Mamoru Taniya, a Japanese businessman and another prior ayondo investor, also injected another 675,000 Singaporean dollars.

Those funds have been raised via convertible notes and, assuming their issuance goes through, Golden Nugget Jinzhuan will have a 66.67 percent stake in the ayondo group.

The company, which is registered in the British Virgin Islands, could be a boon for ayondo.

That’s because it owns a huge, China-focused social trading site –  iMaibo.net. According to ayondo, the site, which redirects users to brokers for trading, has 3.5 million users.

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