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Parent company of Kredivo, Indonesia’s largest buy now, pay later (BNPL) provider, has launched a new assault on the market with the acquisition of Bank Bisnis.
Singapore-based FinAccel has acquired a majority stake in Bank Bisnis, making it the first fintech to have acquired a local Indonesian bank.
By the end of this week, FinAccel’s Indonesian subsidiary will own a 75 percent stake in Bank Bisnis, while the Suriadi family, the previous majority owners of the bank, will retain a significant minority stake.
In a press statement, FinAccel said the acquisition represents a significant step in its expansion strategy.
The move is expected to help FinAccel broaden its offering into a wider range of digital-first financial services, including BNPL, digital credit, digital banking and larger-ticket loans.
FinAccel is the parent company of Kredivo, one of Indonesia’s largest and fastest-growing BNPL providers. Kredivo currently has more than 4m registered users, and makes up more than 50 percent of Indonesia’s local BNPL market.
Akshay Garg, co-founder and group CEO of FinAccel, said: "While Kredivo has been at the forefront of consumer credit digitisation via our BNPL business over the last several years, the digitisation of Indonesian banking services is only getting started.
“In line with our mission to serve customers with products that are fast, affordable and widely accessible, we look forward to serving customers with world-class banking products in the future.
“We are also very grateful to the Suriadi family for their support and cooperation during this year-long acquisition process."
All regulatory approvals for the acquisition have been obtained, including from Indonesia's Financial Services Authority (OJK).
Kredivo’s regional expansion
In August last year, Kredivo launched its BNPL service in Vietnam, where it operates as part of a joint venture.
After combining with the Vietnam-based Phoenix Holding, the two partners formed the Kredivo Vietnam Joint Stock Company.
In addition to Kredivo, FinAccel owns KrediFazz, an emerging digital credit platform in Indonesia.
Both Indonesia and Vietnam are seen by investors as hugely important middle-income markets, with large populations and extremely high growth potential in areas such as electronic payments and digital banking.
In 2020, according to VIXIO data, Indonesians made 13bn non-cash transactions, which includes 5bn e-money transactions and just 1bn card transactions.
Overall, this is equivalent to just 47 annual non-cash transactions per capita, which is well behind regional neighbours, including Malaysia (170) and Thailand (193).
A factor hindering growth is the country's large unbanked population. The World Bank estimates that only half of the country’s 270m population has a transaction account, although this has almost certainly improved over the past few years since the study was last completed.
The country is looking to address many of these issues and modernise its payments systems, including the launch of a new real-time payments system expected later this year.
As a result, Indonesia represents a significant and largely untapped potential to grow digital payments volume.
Similarly, the World Bank estimates that around 30 percent of Vietnam’s 97m has a transaction account. As a consequence, there were just 30 non-cash transactions per capita in 2020, below even Indonesia.
Use of BNPL services is expected to rise substantially in both of these nascent markets in 2022. According to a Q4 2021 survey by Dublin-based Research and Markets, BNPL payments in Indonesia are expected to grow by 94.7 percent on an annual basis to reach $2.66bn in 2022.
In Vietnam, BNPL payments are expected to grow by 126.4 percent on an annual basis to reach $1.12bn in 2022.
FinAccel scraps Nasdaq listing plans
Despite FinAccel’s ambitious growth plans, last month the company decided to scrap a planned listing.
In 2021, three weeks prior to its launch of services in Vietnam, FinAccel had announced plans to go public on the Nasdaq via a special purpose acquisition company (SPAC) that was expected to be worth $2.5bn.
In a letter to the US Securities and Exchange Commission (SEC), executives from both FinAccel and its prospective partner, VPC Impact Acquisitions Holdings II (VPCB), said the SPAC had fallen through due to capital market and geopolitical uncertainties.
“Unfortunately, unfavourable public market conditions and process delays outside of our and Kredivo’s control have affected our transaction timeline and made it infeasible to close the transaction,” said Gordon Watson, co-CEO of VPCB and partner at Victory Park Capital, which had sponsored the acquisition.
“Notwithstanding, we continue to believe in the immense market opportunity for digital consumer credit and banking services in Southeast Asia, and our continued investment in Kredivo reflects our view that the company is well positioned to deliver innovative products and capture market share over the long-term.”
Concurrent with the agreement to terminate, VPC is now leading a $145m private structured investment in Kredivo.
Kredivo plans to consider offers from investors who held positions in VPCB and those that had previously committed to a private investment in public equity (PIPE) deal.
VPC and Kredivo have a long-standing relationship. In July 2020, VPC provided an initial $100m credit facility to Kredivo, and in June 2021, this was upsized to $200m.
FinAccel is currently backed by venture capital firms and corporate investors such as Victory Park Capital Advisors (VPC), Mirae Asset, Naver, Square Peg, Jungle Ventures, Telkom Indonesia, Singtel, GMO and others.
