SINGAPORE — SME lending platform Validus will acquire the loan portfolio of Citi Singapore’s small business banking unit, in a move that is expected to underpin the fintech firm’s plans to double its lending over the next next year.
CitiBusiness, which offered cash and credit management facilities, was closed in August last year – two months after the decision was announced.
The Straits Times understands that Singapore-based Validus will take over CitiBusiness’s outstanding loans, which are still standing.
Validus declined to disclose details of the transaction, including its value, citing confidentiality covenants.
Its co-founder and executive chairman, Vikas Nahata, said the acquisition of CitiBusiness will allow the company to rapidly expand its customer base and loan portfolio, and will also benefit Citi customers transferring to Validus.
“Through our digital platform, they will be able to access additional financing solutions to grow their business, financial services such as business accounts, cards and money transfers, and tools to manage the finances of their business in a smarter and more efficient way,” he said. .
Last April, Citibank announced it was exiting its consumer franchises in 13 markets where it lacks the scale to compete. These retail services are still offered from four wealth hubs, Singapore being one of them.
Mr. Roy Phua, Head of Mortgages and CitiBusiness at Citibank Singapore, said: “Our priority is to ensure a smooth transition of our customers and our loans to Validus, which we believe can continue to serve them. and meet their needs.”
The portfolio transfer is expected to be completed by next month and marks Validus’ second acquisition to date. Last year, it acquired KlearCard, a business payment and expense management technology platform that allows businesses to instantly issue virtual corporate cards with expense control features.
Nahata told ST that Validus is building a virtual business account by integrating KlearCard’s technology into its platform.
These virtual business accounts will include payment, card and expense management services, and will soon be launched in Singapore and Indonesia soon after, he said.
Validus, which holds a Capital Markets Services License from the Monetary Authority of Singapore, provides growth finance to SMEs through funds from individual and institutional investors.
It has disbursed over $1.6 billion on more than 50,000 small business loans in Singapore, Vietnam, Indonesia and Thailand since its launch in 2015. Its average loan size is $150,000 here.
The company – whose investors include Vertex Growth and Vertex Ventures in Southeast Asia and India, backed by Temasek, and K3 Ventures, linked to the Kuok family – plans to double total loans disbursed over the next 12 months. .
Mr. Nahata added, “With access to robust alternative credit data ecosystems and strong data analytics capabilities…(we have been able to sustain) extremely low non-performing loan rates, lower 1% at group level.”
Alternative lenders like Validus aim to bridge the funding gap by targeting SMEs that may be underserved and by simplifying loan applications – typically done online, and requiring fewer supporting documents and no collateral.
Some incumbent banks also facilitate access to funds for SMEs. For example, Singapore’s largest bank, DBS, has provided more than 14,000 unsecured loans totaling more than $6.4 billion to SMEs here since the start of the pandemic, with 90% of loans going to micro and small enterprises.
It also introduced a digital loan acceptance solution to its SME customers on its Ideal online business banking platform last year.