[Updated] Indonesia's Kredivo acquires EWA startup GajiGesa in a distress sale

Editor’s note: The article has been updated to include the deal announcement.

Indonesian fintech firm Kredivo has acquired a 100% stake in GajiGesa, a homegrown earned wage access (EWA) startup, according to an announcement on Wednesday.

DealStreetAsia first reported about the potential acquisition plans on Monday, citing sources aware of the development.

The sources also pegged the total transaction value at up to $5-6 million, a fraction of GajiGesa’s last valuation (around $30 million).The EWA startup had raised a little over $9 million in total funding, and the deal value implies its equity investors have taken a hit. GajiGesa’s shareholders are likely to receive Kredivo shares instead of cash, indicating a share swap rather than a conventional acquisition, they added.

Another executive familiar with the development said it was purely a share swap, and the company and its employees will be retained under Kredivo following the acquisition.

According to industry experts, the deal will allow GajiGesa to access bank capital through Kredivo’s digital banking subsidiary, Krom Bank, at significantly cheaper rates compared to raising capital in the private markets.

Nailul Huda, a director at the economic research firm CELIOS, believes the acquisition will help Kredivo diversify its product offerings beyond Buy Now, Pay Later (BNPL) and digital lending. However, he argued that GajiGesa’s business model — focused on B2B partnerships with employers — has yet to gain widespread adoption, making it a riskier bet.

EWA products, he continued, remain a relatively underutilised service in Indonesia, as many companies are still unaware of its existence.

“This acquisition is interesting because EWA services are still relatively underutilised in Indonesia due to their B2B nature. Many companies are not yet aware of fintech players in this space, including GajiGesa. I see this move as Kredivo’s effort to expand beyond BNPL and digital lending (KrediFazz). By integrating an online ‘cash advance’ platform like GajiGesa, Kredivo can diversify its product offerings and funding sources,” said Huda.

He further noted that the acquisition could reshape Kredivo’s distribution strategy, particularly among salaried employees whose companies partner with GajiGesa.

“Employees in companies that work with GajiGesa may be offered EWA instead of BNPL or online loans. Additionally, EWA users may no longer withdraw cash advances as before but instead use BNPL services to purchase essential goods. This creates a significant and exciting opportunity for Kredivo to expand its product ecosystem,” Huda concluded.

EWA yet to gain traction

Founded in 2020 by husband-wife duo Vidit Agrawal and Martyna Malinowska, GajiGesa is a financial wellness partner for employers in Indonesia. It integrates with companies’ human resource management and payroll systems, allowing workers to access earned wages instantly, track earnings, pay bills, buy prepaid cards, and access financial education.

Unlike traditional lenders, GajiGesa does not charge interest rates or ask for collateral, as all users are pre-approved by their employers. Companies can decide to charge fees or offer GajiGesa as part of their benefit packages and get access to analytics that can help them create targeted incentives or new benefits for their workforce.

However, the B2B model has posed challenges, with adoption remaining slow among Indonesian firms as it also competes with cash loans, consumer lending, etc.

GajiGesa’s last reported funding round was in 2022 when it raised $2.5 million in seed funding co-led by Defy.vc and Quest Ventures. GK Plug and Play, Next Billion Ventures, Alto Partners Multi-Family Office, Kanmo Group, and strategic angel investors also participated.

The startup has raised a total funding of $9.15 million to date, according to DealStreetAsia – DATA VANTAGE.

Top shareholders of GajiGesa

GajiGesa competes with Wagely, Kini, Gajiku, Paywatch, Mekari Flex (from Mekari), Venteny, Vinmo, and Smartwork, all of which target human resource divisions of various companies.

Among these, Wagely has secured the largest funding to date, raising $13.63 million. Besides Indonesia, Wagely is also present in Bangladesh.

Kredivo Group (formerly known as FinAccel) is Southeast Asia’s leading provider of digital financial services through its brands Kredivo (BNPL), KrediFazz (P2P lending for cash loan), and Krom Bank Indonesia (digital bank, formerly known as Bank Bisnis Internasional). Those brands are based in Indonesia.

Its flagship product, Kredivo, is the leading digital credit platform that provides instant credit financing for e-commerce and offline purchases besides personal loans, based on real-time decisioning.

Launched in Indonesia in 2015, Kredivo now operates in Vietnam, Thailand, and the Philippines.

In 2023, the company announced a $270-million Series D funding round, led by Japan’s Mizuho Bank which contributed $125 million. Other investors included Square Peg Capital, Jungle Ventures, Naver Financial Corporation, GMO Venture Partners, and Openspace Ventures.

Kredivo nearly went public in 2022 through a $2.5-billion SPAC deal but later scrapped the plan due to adverse market conditions. The company has since confirmed that it is not looking to revive the SPAC listing for now and that Kredivo is “happy to stay private for the time being” while evaluating public listing opportunities in the future.

In 2023, two subsidiaries of Kredivo in Indonesia, PT Kredivo Finance Indonesia and P2P lending firm KrediFazz, secured a 1 trillion rupiah ($66.57 million) loan facility from state-owned lender Bank Mandiri.