Malaysian peer-to-peer (P2P) financing platform CapBay has acquired a 49 per cent stake in Kenanga Capital Islamic Sdn Bhd (KCI) to form a joint venture to create the country’s first Islamic supply chain finance fintech.
KCI, a subsidiary of Kenanga Investment Bank Bhd, caters to small and medium enterprises (SMEs) in the government sector.
“We have always been committed to offering our customers the solutions they need to advance the growth of Malaysian businesses of all sizes. I am confident that this partnership with Kenanga Investment Bank will allow us to grow as an organisation and better serve our customers as we invest in our infrastructure and service offering.” said CapBay co-founder Ang Xing Xian.
Going forward, CapBay will be managing KCI through the appointment of Ang as CEO as it carves out its strategy to grow the Shariah-compliant business and develop the Islamic finance market. Ang will report to Kenanga Investment Bank group managing director Chay Wai Leong.
“KCI is known for providing thorough and reliable SME financing in the government sector,” said Chay. “We’re excited to enhance our service offering with a larger team of experts at CapBay and are now able to provide high-quality financing services to both the government and [the] private sector.”
Leveraging on CapBay’s technological expertise, this acquisition aims to transform Malaysia’s traditional factoring industry to enable SMEs to obtain financing seamlessly through a digital platform, the company said.
Factoring refers to a source of external financing for corporations and SMEs.
CapBay’s digital process allows transactions to carry on despite restrictions on movement due to the lockdown, the company said.
CapBay’s payment risk scoring model helps predict the risk of each transaction, thereby going beyond financial statements analysis. The company utilises machine learning to assess thousands of data points such as historical relationships, payments, quality of contracts and other patterns.
CapBay’s data-driven approach allowed its clients to keep the default rate low while pushing the boundaries of financing the unbanked and underbanked.
The COVID-19 pandemic has taken a toll on cashflows of businesses of all sizes and it is particularly challenging for SMEs, who not have access to quick and affordable financing to bridge the gap and emerge on the other side of the global crisis, CapBay said.
CapBay was established in 2016. Within a year, the company claims to have financed over RM800 million, thereby serving over 500 SMEs. CapBay said its P2P investors have earned net returns of over 10 per cent, with no financing loss. It has partnered with several large corporates, banks and institutional investors.