Buoyed by the fast-paced digital adoption in the region, US-based private capital manager Victory Park Capital (VPC) is looking to tap investment opportunities in Asia’s fintech sector.
The firm is training its sights on businesses spanning consumer lending, payments, real estate tech, insurtech, as well as trade finance and factoring services. VPC is open to making equity as well as debt investments and will target markets including Singapore, Indonesia, the Philippines, Thailand, Malaysia as well as Japan, and Australia.
“We are in ongoing dialogues with a number of opportunities. We have been seeing quite a bit of activity out of the region in those asset classes,” Victory Park Capital partner Jason Brown told DealStreetAsia.
Established in 2007, VPC has been an active investor in the US market. It extended a $10 million credit facility to the IT services company QSGI Inc and $25 million in senior secured notes to the juice producer Jamba Inc in 2008.
Lately, VPC has also stepped into Asia Pacific countries. In 2020, VPC closed two deals — A$100 million of debt funding in the Australia-listed Zip Co. Limited, a digital retail finance and payments platform; and an 80 million pound debt facility for New Zealand’s Laybuy, a buy-now-pay-later technology platform.
Victory Park cut its first deal in SE Asia with a $100-million debt financing in Indonesian digital credit platform Kredivo in November last year.
Fintech businesses have been taking advantage of the ability to deliver their products digitally, along with the increasing digital adoption. “There’s going to be a continued trend in the (Asia) region…hopefully that provides us with other lending opportunities in the near future,” Brown said.
In January this year, VPC launched two special purpose acquisition companies (SPAC), VPC Impact Acquisition II to be listed on Nasdaq and VPC Impact Acquisition III to be listed on NYSE.
The two SPACs are targeting to raise $225 million each to invest in fintech businesses, according to a report by Renaissance Capital. While VPC Impact Acquisition II will target global fintech businesses, VPC Impact Acquisition III will focus on the US market.
The global market SPAC will have an Asia focus, Brown said. The fintech business acquisition target is likely to have raised significant venture capital equity with a valuation of at least $700 million. “That’s generally kind of the size and scale for a company to be successfully publicly listed through a SPAC in the US,” he explained.
VPC had launched two SPACs prior to the latest vehicles. NYSE-listed L&F Acquisition raised $150 million in November 2020 while VPC Impact Acquisition raised $200 million in September 2020 and has a pending merger agreement with US-based cryptocurrency exchange Bakkt. VPC Impact Acquisition is listed on Nasdaq.
Meanwhile, for debt investments, VPC has partnered with the World Bank’s International Finance Corporation (IFC) for a fintech-focused fund to invest in emerging markets since March 2018. “We’re basically managing a debt fund for them which invests in fintech businesses,” Brown said adding that the partnership has helped them to expand into other regions.
While private capital managers typically look at monetisation within a few years of investment, VPC describes itself as a long-term investor.
“Some of our longest relationships have been for 10 years plus. We’re definitely looking to be doing business with a company for a very long time. Especially, on the debt side,” Brown said.
VPC has invested approximately $6 billion in over 120 transactions globally. The firm has been managing more than 10 funds and has been growing from $500 million to $1 billion per year, Brown said.
Besides IFC, the company counts large international institutional investors including sovereign wealth funds, pension funds, and insurance funds as its LPs.