JAKARTA (TheInsiderStories) – Singapore’ FinAccel, a financial technology (FinTech) company with brand Kredivo, has raised US$90 million in a Series C equity funding round led by Asia Growth Fund and Square Peg, said the company on Tuesday (12/03). Asia Growth Fund is a joint venture between South Korea’ Mirae Asset Capital and Naver.
Other investors participating in the over-subscribed Series C fundraise include Singtel Innov8, TMI (unit of PT Telekomunikasi Selular), Cathay Innovation, Kejora Intervest, Mirae Asset Securities, Reinventure, DST Partners and other investors.
This funding round brings the total capital raised by the firm in 2019 alone to more than $200 million, across both debt and equity, with the debt being provided by a consortium of lenders including banks and credit funds.
Indonesian e-commerce merchants and transaction value growing at more than 300 percent per annum accompanied by bank-like risk metrics. Commenting on the transaction, Akshay Garg, CEO of FinAccel, said, “These highly entrepreneurial companies bring deep domain expertise in financial services and consumer internet, Kredivo sits at the intersection of both areas.”
While, Jikwang Chung, Managing Director of Mirae Asset Capital, the strategic investment arm of the group, said, “FinAccel is an exceptional company, one that combines a strong technology DNA with top-tier risk management and a bold vision of financial inclusion.”
Since inception just over three years ago, FinAccel has evaluated more than three million applications, disbursed nearly 30 million loans and created one of the largest credit-based payment platforms for e-commerce in Indonesia.
Aligned with the Indonesian government’ goals around increasing access to financial services for the country’ vast and fast growing middle class, FinAccel aims to serve 10 million users in the next few years through Kredivo and other financial services.
Near-term plans include the rollout of low-interest education, healthcare and Shariah loans and partnerships with banks for joint product development. Redpeak Advisers acted as the exclusive financial adviser for the Series C equity transaction.
FinTech players are shaking up the banking sector in Indonesia to provide payment and lending facilities and collaboration between the two is likely inevitable in the future.
While in this year the banking sector only posted a single digit loan growth, FinTech lending rose in a significant pace. According to data from the Financial Service Agency (FSA), lending from tech companies providing financial services rose by 300 percent per annum.
There where more than 250,000 people had taken out loans through FinTech companies, data from the the agency showed and regulator sees lending from FinTech companies could reach Rp3 trillion ($214.29 million) this year.
According to the PT Digital Artha Media data, currently there are around 196 FinTech firms in Indonesia and 25 among them have secured the licenses from FSA and another 33 FinTech firms are in the process to get the license, .
The FinTech lending in Indonesia are dominated by the two peer to peer lending firms with the two biggest players are Investree and Modalku. The impressive growth of FinTech lending in Indonesia will continue brighter since the country has a huge population of 260 million people.
The future of FinTech lending in Indonesia also driven by huge users of smart phones reached 100 million in 2017. Currently, around 143 million people connected to the internet in 2017, according to the Association of Indonesian Internet Service Providers data. The majority of these netizen located in the urban areas.
With such a huge population, the inclusive financial rate only reached 63 per cent of the population by the end of 2017. It means there are 165 million people who cannot access the financial services.
Although the FinTech lending has large potential in Indonesia, it faces some obstacles. The main obstacles are the lack of data to assess the feasibility of prospective debtors. Before giving a loan to a user, a startup FinTech lending should check whether the prospective user will be able to return the money or not. The assessment is commonly known as credit scoring.
In other countries, there are many third parties who provide the credit scoring services, but this service is rarely available in Indonesia. As a result, the FinTech lending should be the both lender and credit scorer.
by Linda Silaen, Email: email@example.com