Indonesian digital consumer finance platform Akulaku is in talks to raise a pre-IPO funding round this year ahead of a public listing in 2022, three sources aware of the development told DealStreetAsia.
According to one of the sources, Ant Group-backed Akulaku is targeting to raise $250 million in a Series E round later this year and is understood to be in talks with investors. It has appointed Morgan Stanley as its financial advisor, the source added.
The firm’s diversification beyond consumer finance has resulted in the need for more capital. “The company is obviously looking to expand quite aggressively and needs capital for its services,” said Angus Mackintosh, an analyst at CrossASEAN Research.
DealStreetAsia had reported in February, based on a company filing, that Akulaku is planning to inject more capital into its affiliates in the digital banking, logistics, and financial services verticals, through a rights issue this year.
Its digital lending unit, Bank Neo Commerce Tbk, for instance, has to increase its paid-up capital to Rp 2 trillion ($140 million) by 2021 and Rp 3 trillion ($210 million) by 2022, in accordance with the norms laid down by Indonesia Financial Services Authority (OJK).
As on March 2021, Bank Neo had paid-up capital of just above Rp 1 trillion ($71 million), according to its Q1 2021 financial statement.
Meanwhile, net interest income (NII) stood at Rp56.88 billion ($3.96 million) in the quarter, down 9.61% year-on-year. The net interest margin (NIM) was 5.04%, compared with 5.15% in Q1 2020. The bank’s net non-performing loans (NPL) increased from 2.3% in Q1 2020 to 3.25% in Q1 2021.
Akulaku, which allows buyers to pay for purchases in instalments without a credit card, together with its affiliate company, Rockcore Financial Technology Co.Ltd, holds a 31.1% stake in Bank Neo Commerce. As the controlling shareholder, the Akulaku group will inject more capital into its digital bank this year.
E-mails sent to Akulaku by DealStreetAsia had not received any response at the time of publication.
In April last year, Akulaku was suspended from Mintos, the global marketplace for P2P loan originators over late payments on about €4.7 million ($5.1 million) of loans. Mintos allows loan originators like Southeast Asia-focused Akulaku to raise funds from investors on its platform to fund loans in their home markets.
Akulaku announced in June this year that it has fulfilled all its obligations to Mintos — a sign of better financials.
The COVID-19 pandemic has resulted in better business for consumer lending platforms such as Akulaku.
“Even at the height of the pandemic last year, we had enough cash on hand to repay Mintos and other creditors, but we delayed repayment and ended up signing a series of restructuring agreements with Mintos due to the uncertainty around COVID-19’s economic impact on Southeast Asia. We decided to offload the debt obligation ahead of the restructured schedule, given that the economic environment has drastically improved in the last quarter, and our operational performance has been strong coming out of the pandemic,” Suri Guo, investor relations at Akulaku told DealStreetAsia in June 2021.
Guo declined to disclose the company’s 2020 performance. However, according to a document seen by DealStreetAsia, Akulaku Group booked total revenue of $269 million and a net loss of $48 million in 2020. The group was targeting breakeven in the first half of this year, and aimed to close 2021 with a $26 million net profit.
The group claimed to have a total of 7.6 million users who availed $1.11 billion worth of credit on its platform in 2020. The number of credit users grew 70%, while loan origination was up 8.1% from 2019.
However, the company is known to have high levels of NPL. Yet, Guo revealed the NPL levels are lower than they were before the pandemic, due to a better risk management strategy.
In Indonesia, Akulaku has obtained 2 million monthly active users, with $2.9 billion total loan disbursement. The company claimed to partner with more than 5,000 merchants, including some e-commerce platforms, Shopee, Blibli, JD.id, Lazada, DANA, Bukalapak, and offline chain stores Alfamart.
Akulaku, which was founded by William Li and Gordon Hu, has raised a total of $182 million in funds from 2016 to 2018. The last funding was $68 million in Series D round in 2019, which was led by Ant Financial. Other existing investors including, Sequoia Capital, JANUARY Capital, Qiming Venture Partners, and ARBOR.
The plan comes after its buy-now-pay-later (BNPL) peer Kredivo’s parent company, FinAccel, announced a merger with US-based Victory Park Capital’s second blank cheque firm at a valuation of $2.5 billion earlier this month. FinAccel has also forayed into Vietnam by forging a JV with local firm Phoenix Holdings.