Deal focus: Oriente’s plastic alternative

“No one knows much about the world that we are in today. If Apple can't give guidance then I can't give guidance,” says Geoffrey Prentice, co-founder of Oriente, the Hong Kong-based developer of consumer lending apps Finmas and Cashalo. “What's good is that our loan tenor is very short, and our book is quite small.”

At least Oriente is well-capitalized. Last week, it raised approximately $50 million in a funding round led by Peter Lee, the co-chairman of Hong Kong property developer Henderson Land. This follows a $105 million seed round in 2018.

The company does, however, have a large workforce. This includes more than 400 individuals in the Philippines and Indonesia who help run credit checks that allow users to borrow up to $150 within minutes of applying. There have been hundreds of layoffs recently to trim costs at a time when consumption activity – and demand for credit – is muted.

Before the pandemic’s arrival, it was a different story. Prentice, who is also the co-founder of Skype, moved to Hong Kong from London and teamed up with Hubert Tai, the co-founder of Chinese digital lender Lufax to develop the two apps targeting low-income workers and younger consumers. Launched in 2018, Cashalo in the Philippines and Finmas in Indonesia soon became popular with users and merchant partners alike.

The company claims that Cashalo’s “pay later” solution has become the second-most-popular payment method in the country after cash, while merchants are seeing their sales increase by an average of 20% a year. Overall, Oriente now serves more than four million users. This is despite prioritizing infrastructure – to keep non-performing loans in check – over customer acquisition over the past two years.

Oriente’s goal is for every Southeast Asian consumer to enjoy the convenience-enhancing credit solutions that salaried workers take for granted. Several other start-ups – including Go-Jek, Paymaya, Ovo and Grab – share this vision. They own some of the leading payment apps in the region, but Prentice says the business models are different.

"Payments are about merchant or consumer acquisition, not disbursement, collections or risk management,” he argues, adding that many of these start-ups have even approached Oriente for talks.

But COVID-19 will test every fintech start-up, potentially leading to consolidation of a crowded digital lending ecosystem. Oriente’s suite of apps will remain attractive provided they offer an effective alternative to cash – the start-up now just has to wait until people venture outside and start spending more freely.

In the meantime, the company is pushing ahead with expansion plans formalized last year. Later in the month, it will launch an app targeting a similar group of users in Vietnam leveraging the help of an undisclosed strategic partner. As credit card penetration remains low in Vietnam, the third most populous country in the region, Oriente believes it has once again found the optimal conditions.

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• Topics
• Expansion
• Southeast Asia
• Technology
• Indonesia
• Philippines
• Thailand
• BlackPine Private Equity Partners
• Fintech