Kredivo Receives Funds of IDR 1.4 Trillion and Aims to Grow 250%

A financial technology company (fintech) Kredivo received credit line funds of US$ 100 million or IDR 1.4 trillion from an investment company from the United States (US) Victory Park Capital (VPC). This additional capital will be used to expand loans so that business performance will grow by 250 percent next year.

Kredivo Co-Founder Umang Rustagi claims this credit line funding is the largest ever received by fintech in Southeast Asia. The fresh funds will be used to diversify loan books, all of which come from third-party funds.

“This will accelerate business scalability and realize the target of serving 10 million new users in the next few years,” Umang said during a virtual press conference regarding credit line funding, Tuesday (24/11).

Diversification refers to the development of several loan products such as healthcare loans, education loans, and Micro, Small, and Medium Enterprises (MSMEs). Kredivo’s Head of Marketing, Indina Andamari, added that the funding will also support efforts to achieve the growth target next year.

“We are optimistic that the digital community is now more educated about using Kredivo for productive things,” he said. Next year, the startup wants to increase the portion of loans to the productive sector. “So many people use (Kredivo) not only for online shopping but also for increasing cash flow,” he said.

Currently, loans in the productive sector account for more than 20%. The largest is to the consumptive sector, especially online shopping. Even so, based on Kredivo’s internal data, the number of new users increased by 42% in the second quarter.

Will Expand Access to Loans to the Regions

The company also plans to expand access to loans to the regions. Currently, Kredivo serves several tiers or two-tier cities such as Medan, Palembang, Manado, Makassar and Balikpapan. “I hope that the portfolio will be spread outside Java,” he said.

Kredivo also shifted its focus from financing (lending) to multi-finance, “The way we operate has not changed. In terms of DNA, we are a technology company, so we are still fintech, “he said. The change occurred after Kredivo acquired PT Swarna Niaga Finance in early October.

CEO of Kredivo Indonesia Alie Tan said company financing was dominated by product purchases from partners so that a multi-finance license was considered more suitable. Even so, “Nothing has changed in terms of Kredivo’s business with this acquisition,” said Alie Tan, last October (9/10).

Since its establishment at the end of December 2015, Kredivo has distributed loans to around 30 million borrowers. This year, the company is targeting IDR 4 trillion. Meanwhile, Partner at VPC Gordon, Watson said, Indonesia is the most developed market in the world. Therefore, the company invests in Kredivo.

“This is VPC’s first investment in Southeast Asia,” he said. Based on the 2020 e-Conomy report, the internet-based economic value in Southeast Asia is US$ 105 billion or around IDR 1,475 trillion this year. As much as US$ 44 billion or IDR 619 trillion of them contributed by Indonesia.

Focusing on Finance in the Pandemic Era

PT FinAccel Finance Indonesia or Kredivo completed the acquisition of a finance company (multi) in the pandemic era, to take the momentum of business expansion and expand market share.

Kredivo Co-Founder Umang Rustagi explained that the strategy to get a license as a multi-finance company is an effort to embrace the trust of more people, as well as accelerate the expansion of business lines.

“Indonesia is a market with great prospects. We hope the multi-finance acquisition will allow Kredivo to more freely expand digital-based credit services in various sectors,” he said, Tuesday (11/24/2020).

If previously Kredivo was only known as consumer credit through the PayLater platform, with its strategy of acquiring multi-finance companies, Kredivo can now be more confident in targeting the distribution of funding for the education and productive sectors, consumers outside Java, and accelerating the realization of the target of serving up to 10 million new users in the next few years.