Akulaku, the Indonesian fintech firm that allows buyers to pay for purchases in installments without a credit card, is looking to expand its business lines as its core consumer finance business stalls.
The Ant Group-backed firm plans to inject more capital into its affiliates in the digital banking, logistics, and financial services verticals, through rights issues this year, DealStreetAsia has learned based on information disclosed to the Indonesian Stock Exchange.
This comes as the firm remains suspended on Mintos, the global marketplace for P2P loan originators.
Akulaku plans to inject Rp62.41 billion ($4.47 million) into Bank Neo, in which it held a roughly 25% stake as of September 2020.
Meanwhile, AsetKu Ecommerce Limited — an affiliate of the Akulaku-owned P2P lender AsetKu — will inject a minimum of Rp148.68 billion ($10.64 million) into the logistics company PT Trimuda Nuansa Citra Tbk. Akulaku holds 31.62% in AsetKu Ecommerce Limited.
Akulaku is hoping that the strengthening of its digital banking and logistics verticals will bolster its overall portfolio, by roping in more customers to its lending business.
Digital banking play
Akulaku, through its e-commerce vertical PT Akulaku Silvvr Indonesia, is preparing to absorb new shares in the rights issue of Bank Neo Commerce Tbk, a small-sized lender with ambitions of transitioning into a digital bank.
Bank Neo Commerce Tbk is looking to raise about Rp250 billion ($17.93 million) through a rights issue in the first quarter of 2021 as it seeks to comply with The Financial Services Authority’s (OJK) newly-mandated core capital requirement of least Rp3 trillion by 2022.
Besides Akulaku, Yellow Brick Enterprise, which holds an 11% stake in the bank, is planning to subscribe to the rights issue by injecting Rp27.73 billion ($1.98 million). Bank Neo’s other major shareholders are PT Gozco Capital (20.13%), and PT Asabri (18.1%), who will not be participating in the rights issue.
After the rights issue, Akulaku will maintain its 24.98% of ownership in Bank Neo.
The fintech firm acquired an initial 8.95% stake in the bank (formerly known as Bank Yudha Bhakti Tbk) from Gozco Capital in April 2019, following Ant Group’s $40 million investment. It gradually increased its shareholding in the bank to 24.98% stakes by 2020.
Akulaku is only one of the many new-age firms betting on transforming traditional lenders into digital banks in Indonesia. In January this year, Sea group acquired Bank Kesejahteraan Ekonomi (BKE), while ride-hailing firm Gojek raised its stake in Bank Jago to 22.16% from 4.14% in December.
Bet on logistics
PT Trimuda Nuansa Citra Tbk, the Akulaku-backed logistics company that is planning a rights issue in the first quarter of 2021, is targeting to raise Rp200 billion. Based on the company’s December 2020 prospectus, Asetku Ecommerce Limited will be the ultimate shareholder owning 65.96% in the logistics firm after the rights issue.
Most of the funds will go into acquiring and injecting capital in the insurance firm PT Asuransi Staco Mandiri, which provides insurance to goods delivery and P2P lending.
Established in 1995, Trimuda is a B2B logistics company that focuses on shipping and logistics under the brand Garuda Express Delivery. Akulaku has been a shareholder in Trimuda since 2018.
Akulaku’s affiliate companies, PT Belanja Hitungan Detik and Asetku Ecommerce Limited, also have 23.99% and 27.49% shares in Trimuda. The rest is owned by PT Asuransi Intra Asia (5%) and the public (11.9%).
Akulaku pumping capital into the logistics company and the digital bank come amid Indonesia’s e-commerce boom.
“If the fintech firm has already had strong basic data, it is a good move to enter digital banking and other sectors like logistics. The diversified fintech firm can offer competitive prices by combining payment services and logistics from the same company. If the customers can’t pay, they can use Akulaku’s loan services,” said Nailul Huda, an analyst from the Institute for Development of Economics and Finance (INDEF).
Consider Tokopedia, for instance. The decacorn has invested in logistics companies such as AnterAja, SiCepat, and Wahana logistics, and also holds a stake in the payment wallet OVO.
Chinese fintech playbook
An industry expert noted that Akulaku’s playbook is similar to China’s Alibaba, which relies on a combination of e-commerce and fintech. “If it relied only on consumer loans, it wouldn’t grow fast, as it would be constrained by NPLs,” the industry expert said.
Before its launch in Southeast Asia in 2016, Akulaku began as a cross-border remittance service in Hong Kong known as Silvrr app. It subsequently rebranded to Akulaku and expanded to Malaysia and the Philippines targeting online consumers with payments through installment options. It has created various consumer loan products such as Akulaku Pay and Akulaku Kredit and non-collateral debt from AsetKu.
The firm disburses its consumer loans and productive loans (for merchants) to many e-commerce platforms and offline partners, including its own Akulaku e-commerce app, Bukalapak, Shopee, Blibli, and Tanihub.
Local news outlets reported that Akulaku will launch its sharia-compliant platform in the first half of 2021.
William Li, CEO of Akulaku, revealed that the strengthening of non-core businesses is part of an effort to ensure a financial solution, especially for the unbanked population and Indonesia’s underbanked population.
“Besides our lending business and AsetKu, our wealth management arm, we plan on adding more services such as banking, payment, insurance, etc. to our product suite, so that we can meet more of the needs of our clients,” Zeng added.
While Akulaku has raised top dollar from investors, it has run into problems in repaying loans.
Akulaku Funding activity
Year Investors Investment type Total amount (in US$)
2014-2015 IDG Capital, China Growth Capital seed 3 million
2016 IDG Capital, China Growth Capital, DCM Ventures series A 5 million
2017 Arbor Ventures, Welight Capital,
Eight Roads Ventures, DCM Ventures
series A 11 million
2017 IDG Capital, DCM Ventures series A 10 million
2017 Shunwei Capital, Qiming Venture Partners,
Legend Capital, IDG Capital
series B 30 million
2018 Fanpujinke group, BlueSky Venture Capital,
Sequoia Capital India, Qiming Venture Partners,
Legend Capital, January Capital, IDG Capital,
Eight Roads Ventures, Arbor Ventures
series C 70 million
2019 Ant Group venture round 40 million
2020 Risa Partners, Whitetail Asia venture debt 10 million
Total 179 million
Akulaku made headlines last year when Mintos suspended it from the primary and secondary markets in April.
Mintos noted at the time that there was a possibility that borrowers’ repayments will need to be restructured, following a borrowers’ moratorium in Indonesia. It also noted that Akulaku had difficulties and missed settlement payments due in March and April, which resulted in accumulated pending payments for investors on Mintos’ platform.
Akulaku is currently negotiating the restructuring of the debt with Mintos and has recovered 45.45% of the dues, worth €4.7 million ($5.1 million) as of July 2020.
However, while under suspension on Mintos, Akulaku tapped other cash sources for financing its consumer loan services. In 2020, the firm partnered with at least four lenders, including Bank Jago, Bank OCBC, Bank JTRUST, and BPR Supra Artapersada.
In an email to DealStreetAsia, Akulaku said it has maintained its non-performing financing (NPF) at 0.05% in 2020. The total loan disbursement in Akulaku Finance Indonesia grew 30% last year.
“Our NPL levels are at historical lows. We keep refining our risk model based on market conditions and data. The pandemic in 2020 was certainly a good learning experience for us, and our model has made additional adjustments because of COVID,” said Stella Zeng, an Akulaku spokesperson.
According to the balance sheet from Mintos’ website, in December 2019, Akulaku recorded a $207.9 million top line and a $37.2 million net loss.
Additionally, its short- and long-term borrowings have sharply increased compared to 2018. The short-term borrowings increased 329% from $40.41 million to $173.44 million. Long-term borrowings skyrocketed 1168.5% from $1.97 million in 2018 to $24.93 million in 2019-end.