Oriente has laid off around 20 per cent of its employees since the fourth quarter of last year amid disruptions caused by the COVID-19 outbreak, the online lending firm told DealStreetAsia.
The layoffs were initially reported by Tech In Asia and confirmed to DealStreetAsia by a company representative.
“The continued uncertainty regarding the depth and duration of this crisis means that while we hope for the best, we must firm up efforts to ensure we are in a strong position to withstand the worst,” a company representative told DealStreetAsia via email. “We’ve been forced to make tough choices and painful decisions that we have never made before or in better circumstances would never choose to – including force reductions, salary cuts, and furloughs.”
Most of the job cuts have been for offline sales in the Philippines and Indonesia, the representative said, noting the company currently has around 1,600 employees.
The company said its founders would take no pay for the rest of the year, and the entire senior management team would take salary cuts of 30 per ent to 50 per cent.
“To protect the company from the fallout, we have had to take a hard look at every expense in line with current and forecasted market conditions and our more focused strategy. Since the beginning of the year, we’ve curbed all spending company-wide,” the Oriente representative said.
While Oriente hasn’t yet seen an uptick in non-performing loans (NPLs), local authorities in the markets it operates in have imposed moratoriums on collections and provided borrowers with extensions, the representative said.
“We do expect to see some increase in NPLs as a result of the broader economic impact of COVID-19,” the representative said.
Lending has been particularly hard-hit amid the COVID-19 outbreak, with many countries imposing moratoriums on debt collection and many businesses facing steep revenue declines.
The virus has infected around 3.35 million people globally and caused nearly 239,000 deaths, according to World Health Organization data for Sunday.
Even traditional banks have taken a hit.
Southeast Asia’s largest bank, DBS, reported last week its non-performing loan ratio rose to 1.6 per cent in the first quarter from 1.5 per cent in the fourth quarter; the bank said it boosted its allowance reserves by 21 per cent to S$6.08 billion in anticipation of economic turmoil ahead.
In a research note, Maybank Kim Eng analyst Thilan Wickramasinghe estimated the bank’s NPLs would rise to nearly 3 per cent, with credit charges to stay elevated through 2023, on the effects of the pandemic.
Oriente said the company would need to adapt to a “new reality” with sharp revenue declines and fewer users amid efforts to contain the virus.
“Given the continued uncertainty and volatility in the markets, we have been extremely fortunate to have secured additional funding recently from new and existing investors that will help us come out of this crisis much stronger. Our aim is not only to mitigate anticipated headwinds on liquidity but to demonstrate that our business has the potential to overcome and outperform the market in a recession,” Oriente said.
In late April, Hong Kong-based Oriente raised $50 million in a series B funding round led by Henderson Land’s co-chairman Dr Peter Lee. The ongoing round was also joined by Israeli software company Wix.com and other existing investors, according to a statement.
Oriente is the parent company of Finmas, Cashalo and Finizi, three online lenders based in Indonesia, the Philippines and Vietnam, respectively. Its technology covers real-time credit scoring, digital credit, offline-to-online (O2O) consumer finance, POS lending, and working capital financing for small entrepreneurs.
In addition, Oriente raised an up to $50 million debt facility secured from Silverhorn Group, a Hong Kong-based multi-asset investment firm, according to Crunchbase.
Previously, the company raised $105 million equity in November 2018 from the founders and a group of family offices including members of Malaysia’s Berjaya Group, the Philippines’ JG Summit Holdings, and Indonesia’s Sinar Mas.
Oriente was founded in 2017 by former Skype executive Geoffrey Prentice, former founding CTO and COO at LU.com Hubert Tai, and founder of BlackPine Private Equity Lawrence Chu.