Kredivo today announced that it has secured another $ 100 million credit facility from Victory Park Capital (VPC). This doubles the total warehouse finance facility of VPC’s Indonesian digital lending and credit platform to $ 200 million. The first round was closed in July 2020.
Kredivo is operated by Singapore-based fintech FinAccel. This is the largest loan facility it has raised so far, and it is VPC’s largest debt commitment to a FinTech company outside of the US and Europe. , as well as its only investment in Southeast Asia. Kredivo will use the credit facility to achieve its goal of serving 10 million customers in Indonesia.
Other notable startups that have received debt financing from VPC include Razor Group, Factory 14, Konfio, and Elevate.
Kredivo has over three million customers and offers two main types of loan products: 30-day interest-free buy now, pay later financing for e-commerce and offline purchases, and three installment loans. , six and 12 months with an interest rate of 2.6% per month, ie a maximum annual rate of 53.36%. Kredivo chief executive Akshay Garg told TechCrunch his “buy now, pay later” services are typically used for low-value online purchases, while installment loans are used to fund larger transactions. , such as laptops, home improvement or medical care.
While “buy now, pay later” services like Klarna, Afterpay or Affirm provide convenience to customers in the United States or Europe, in emerging markets, they also serve as a tool to create credit, especially in countries with low credit card penetration, Garg mentioned.
“Credit is one of the largest and most complex areas of the financial services ecosystem and the fact is Indonesia is deeply underserved in this equation,” he said. Most banks only offer secured loans, such as home or auto loans, and unsecured loans are rare. Garg said there are only eight million credit card holders in Indonesia, which has a population of 270.6 million, and that number has not changed in 13 years.
One of the reasons for Indonesia’s very low credit card penetration rate is that banks are reluctant to provide unsecured loans, especially to younger customers.
“What we’re solving is less a convenience issue than an access issue. We’re putting unsecured credit, or the ability to buy on credit, into the hands of urban millennials for the first time, just because the banks just won’t give them access to credit cards, ”Garg said.
He added that Kredivo’s efficient risk scoring model allows it to charge low interest rates and its NPL ratio sits in the low single-digit, despite the economic impact of COVID-19, that Garg described it as a “trial by fire”. “
Like bank credit cards, Kredivo also reports customer loan history to Indonesian credit bureaus, so they can establish credit scores. “What we’re doing is building Indonesia’s first true digital credit bureau from scratch, and I think our risk measurements show that it’s not just for great innovation, but something that delivers real performance, ”Garg mentioned.
In a statement, VPC partner Gordon Watson said, “We have been impressed with the resilience and growth of the business and look forward to deepening our partnership with Kredivo. The company presents a unique combination of growth, scale, risk management and financial inclusion in one of the most exciting emerging markets in the world. “