Southeast Asia's FinAccel agrees $2b SPAC merger

The start-up has previously raised approximately $150 million in equity funding, most recently a $90 million Series C round – at a valuation of $500 million – in late 2019 that was led by Square Peg Capital and Mirae Asset-Naver Asia Growth Fund. Singtel Innov8, Cathay Capital, Kejora Capital, Telkomsel Indonesia, Reinventure, and partners of DST Global also made contributions.

FinAccel’s earlier backers include 500 Startups, Alpha JWC Ventures, GMO Venture Partners, Jungle Ventures, Openspace Ventures, Atami Capital, MDI Ventures, and Partners for Growth.

The SPAC, VPC Impact Acquisition Holdings II, was launched by Victory Park Capital, a US-based investment firm that has provided FinAccel with $200 million in credit facilities over the past 12 months. The SPAC raised $225 million earlier this year.

SPAC investors will hold a 10% equity interest in the merged entity, while the SPAC sponsor – sponsors typically receive a 20% stake in the SPAC (not in the merged entity) for a nominal sum post-listing – will own 2%. Institutional investors are participating in a $120 million PIPE for 5%, while Naver and Square Peg are making a separate commitment of $55 million.

The bulk of the equity – $2 billion out of $2.4 billion – comes from existing investors in FinAccel who are rolling over their interests. They will own 83% of the merged entity.

The transaction, which values the company at 6.3x projected revenue for the 2022 calendar year, will create balance sheet cash of $403 million. It still needs to be approved by a majority of SPAC investors. On completion, they can exercise their warrants and purchase shares or redeem some or all their shares for cash.

Kredivo claims to be the largest buy now, pay later platform in Indonesia, providing customers with instant credit financing for e-commerce and offline purchases, as well as personal loans. Lending decisions are made in real-time using an artificial intelligence-enabled assessment engine. It is accepted by eight of the top 10 e-commerce merchants in Indonesia

Nearly two-thirds of the company’s revenue comes via interest fees charged to consumers, and the rest from administration and late payment charges and merchant fees. Revenue reached $74 million in the 2020 financial year and is expected to hit $320 million in 2022. Over the same period, cumulative users are projected to rise from 2.2 million to 6.3 million, with transaction volume jumping from $574 million to $2.17 billion.

FinAccel posted a net loss of $23 million in 2020, compared to $13 million in 2019, while EBITDA went from negative $14 million to negative $19 million, according to a presentation.

Growth is expected to be driven by increased penetration in Indonesia, where e-commerce is proliferating yet less than 10% of the middle class possesses a credit card and credit infrastructure is weak. There are also plans to enter new markets within the region, with Vietnam and Thailand considered immediate priorities.

“Unlike Western markets where credit is readily accessible, traditional banks in Southeast Asia have historically provided little consumer credit in our markets, which creates a large opportunity for Kredivo to tap into other credit needs, such as personal loans, and fulfill our vision of providing fast, affordable, and easily accessible credit to tens of millions of customers in the region,” said Akshay Garg, co-founder and CEO of FinAccel, in a statement.

FinAccel is the third major Southeast Asia-focused internet company to agree on a SPAC merger, following ride-hailing and local services platform Grab and real estate portal PropertyGuru.

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• Topics
• Southeast Asia
• Financials
• Technology
• IPO
• Indonesia
• Fintech
• Square Peg Capital
• Mirae Asset Private Equity
• SingTel Innov8
• Cathay Capital Private Equity
• DST Advisors
• Kejora Ventures
• Openspace Ventures
• MDI Ventures
• 500 Startups
• Alpha JWC Ventures