International private equity (PE) firm Finstar Financial Group (Finstar) has backed a $50 million investment in Digital Finance International (DFI), a digital lending solution developer, to help the latter expand its presence in the Asia Pacific (APAC).
Additionally, Finstar plans to add to its fintech portfolio via the commitment of $150 million to the financial technology space over the next five years.
DFI will use the $50 million investment to expand its consumer lending solution in Asia, with a focus on broadening its international presence in mobile-first consumer finance in Southeast Asia. This will see the roll-out of DFI operations in several large Asian economies is planned for the near future.
According to KPMG, in Q3’17 fintech investment in Asia grew to over $1 billion for the first time this year, despite a drop-off in the number of fintech deals. Total global fintech funding stood at $8.2 billion in 3Q17, after more than doubling to $9.3 billion in 2Q17. Despite overall deal volume declining, deal value in 3Q17 was significantly higher than the $6.3 billion seen in 3Q16.
Finstar’s five-year investment plan, which it adopted in July 2017, aims to strengthen the Group’s holdings in innovative consumer technologies, and increase its portfolio exposure to high growth emerging markets across Europe, Latin America and Asia-Pacific.
Oleg Boyko, Finstar’s Executive Chairman and Founder, said: “The rapid growth in consumer demand across the Emerging Markets offers exciting opportunities for fintech-enabled disruptive lending technologies. With our market-leading expertise, Finstar can capitalize on these emerging trends.”
Founded in 1996, the PE firm has a presence in Europe, the US, Asia, Latin America and the Commonwealth of Independent States (CIS). While traditionally focused on financial technology, it has also invested in financial services, IT, FMCG retail, media, and real estate.
Its investment strategy sees the PE firm focus on the acquisition of majority stakes in rapidly growing financial technology and financial services firms with proven business models in promising segments and led by capable founding partners. Its minimum deal size is $20 million with a maximum deal size of $200 million.
Its target internal rate of return (IRR) is 35 per cent over an investment horizon of three to five years, with Finstar exiting either through a public float or sale of its stake to a strategic investor.