Singapore-based digital lending platform Lend East plans to raise $50 million in debt capital to back alternative lenders in Southeast Asia and India.
According to Lend East CEO and founder Karan Bhatia, the firm has secured $5 million from family offices in Singapore and India. The company targets to close the fund by the third quarter of 2020.
It is also actively speaking to potential investors from North America, Europe and China who are keen to find a way to understand and invest in the Southeast Asian market. Most of these are institutional investors, high net worth individuals and family offices.
Launched in October 2018, Lend East provides due diligence services, sourcing, vetting and structuring debt deals in emerging Asia. Lend East’s platform promises to help thousands of underserved consumers and SMEs in the region gain access to quality debt funding.
Bhatia believes that the capital debt market in Southeast Asia and India remains highly underserved and wants to plug this perceived gap in the region.
“Alternative lenders in emerging Asia have been supported by strong deep-pocketed VC and institutional investors. Despite the sizeable books and good loan performance, they remain hugely under-levered. Equity becomes an expensive source of capital to grow loan books, hence provision of the right debt facilities will prove crucial to the growth and success of such ventures,” said Bhatia.
“On the other hand, global investors who have exposure to this asset class in mature markets like US, UK and Europe are keen to build an Asia portfolio but have limited regional experience. This is the gap that Lend East aims to bridge,” he explained.
Lend East will primarily target alternative lenders which include peer-to-peer lenders, non-banking financial institutions, micro-finance companies and marketplaces.
The company has so far made its first two loans in consumer lending platforms from Indonesia and the Philippines, and plans to grow its portfolio to 20 VC-backed alternate lenders from markets like India, Vietnam and Myanmar. Some of the players it has been speaking with include Indonesia’s Akulaku and Hong Kong-based fintech firm, Oriente.
Lend East is also open to doing loan buyouts, loan securitisations, and venture debt. All of its loans will be deployed out of its balance sheet for now, said Bhatia.
The Singapore-based company raised an undisclosed seed round from angel investors in the first quarter this year. Moving forward, Lend East will expand its digital platform by designing analytics, portfolio credit scoring systems and credit risk monitoring mechanisms.
Southeast Asia’s debt capital market is still highly nascent at the moment, with few players offering such debt products. Similar players in the space include India’s Vivriti Capital and Singapore-based Helicap. Those offering venture debt include Singapore-based companies, InnoVen Capital and Genesis Alternative Ventures.