The financing landscape in Southeast Asia is still winter, but one fintech managed to win a big round. Kredivo Holdingswhich offers credit services to underbanked consumers in Indonesia and Vietnam, raised $270 million in what it says was an oversubscribed series D.
The round was led by Japanese bank Mizuho Bank, a subsidiary of Mizuho Financial Group who contributed $125 million. It included participation from returning investors such as Square Peg Capital, Jungle Ventures, Naver Financial Corporation, GMO Venture Partners and Openspace Ventures.
The company has now raised a total of approximately $400 million in equity capital and has committed debt facilities of nearly $1 billion to grow its loan portfolio.
Kredivo CEO Akshay Garg declined to disclose Kredivo’s current valuation, but told businesskinda.com it has risen 4x to 5x “in every valuation round historically.” He added that Kredivo now accounts for 3% to 4% of total GMV for its top e-commerce merchants in Indonesia, compared to 15% to 20% for credit cards.
The company nearly went public last year in a $2.5 billion SPAC deal but scrapped it, citing adverse market conditions. Garg said there are no plans to revive the SPAC and that Kredivo is “happy to remain private for now” and will evaluate public listing options later.
When asked how many active users Kredivo has, Garg said the approved user base “is now in the same range as Indonesia’s credit card population and we plan to surpass it in the next two years.” According to the Bank of Indonesia, there are about 15 million to 16 million credit cards in circulation, but research from Kredivo found that most credit card holders have two, so the number of unique cardholders is about half that number.
The founding team of Kredivo. Image Credits: credit
Kredivo, formerly known as FinAccel, is the parent company of Kredivo and Krom Bank Indonesia, the new neobank. The company’s products include online and offline buy now, pay later, personal loans, credit cards and banking services through Krom.
“Neobanking is very synergistic with our existing Kredivo business and represents a very large business opportunity in its own right given the size of unbanked and unbanked users in Indonesia,” said Garg. Krom’s services will launch this year with deposit and transaction banking, pending final regulatory approvals.
Kredivo is also building an open-loop credit card-like product, including Infinite Card, a virtual card partnership with Mastercard and offline card Flexicard, through direct partnerships with online and offline merchants.
Kredivo’s target demographic is consumers with underbanked accounts, or people who have access to bank accounts but have little access to credit due to the poor infrastructure of credit bureaus and the reluctance of traditional banks to offer unsecured credit. Since Kredivo doesn’t rely solely on traditional credit bureaus, it measures the creditworthiness of potential consumers through data sources such as telcos, e-commerce accounts, and bank accounts.
Another way Kredivo mitigates risk (and lowers the cost of its credit) is by targeting urban, white-collar, working customers, typically with bank accounts, compared to competitors that target higher-risk consumers and accordingly charge higher interest rates.
Kredivo’s direct and indirect competitors include Akulaku’s BNPL and Bank Neo Commerce (the fintech also recently raised significant funding from a major Japanese bank), Advance.ai’s Atome BNPL service, and Kredit Pintar cash loans and Sea Group’s Sea Money.
In a statement on the investment, Mizuho Group Executive Banking Company Deputy Chief Executive Officer said: “Kredivo has an excellent track record in Southeast Asia and is leveraging its deep data partnerships to drive financial inclusion in Indonesia and Southeast Asia. -Advance Asia while maintaining bank-like risk metrics and building a capital-efficient business model.
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