Pakistan’s Habib Bank backs digital SME lender
Habib Bank, the largest bank in Pakistan, has joined a $10.1 million Series A round for Finja, a leading local financial technology start-up and small to medium-sized enterprise (SME) lender.
Habib is investing about $1.1 million as part of the final tranche of a Series A round that raised $9 million on a target of $10 million in December 2020. That tranche featured Ukraine-based ICU Ventures, US-based Quona Capital, Japan’s Beenext, Sweden’s Vostok Emerging Finance, and United Arab Emirates-based Gray MacKenzie Engineering Services.
Habib claims to be the first Pakistani bank to invest in a fintech start-up, referring to its contribution to the round as a landmark investment in the ecosystem. The bank said it wants to reinvent itself as a “technology company with a banking license.” Its strategic priorities include digital financial inclusion and development finance companies in the agriculture and SME sectors.
“[W]e believe that by making this investment we are not only developing the start-up ecosystem, but it will also pave the way for Pakistan to play a bigger role in the fintech space globally,” Muhammad Aurangzeb, CEO of Habib, said in a statement. “SME lending is the future and therefore we are investing in Finja which enjoys a first mover advantage over the market in digitally lending to SMEs in this country.”
Finja started as a mobile wallet in 2016 before transitioning into a mobile lending platform primarily serving individuals and neighborhood grocers. The company offers payment, invoicing, payroll, and credit services, including a B2B lending platform and Finja Card, which lets professionals access their salaries in advance. It recently agreed a tie-up with local logistics operator BlueEx to digitize its SME distribution network.
Finja claims to have seen 64% month-on-month growth since the onset of the pandemic, with its lending portfolio expanding 550% since April last year. To date, Finja has disbursed more than 50,000 digital loans to micro businesses and SMEs, which the company claims enjoy a 40% increase in revenue due to the support with a less than 1% default rate. It estimates Pakistan’s small business and consumer lending market is worth $60 billion.
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