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Cashalo, a credit financial services apps operated by Oriente Investment. Photo: Handout

Skype co-founder raises US$20 million to expand online lending venture focused on financial inclusion in Southeast Asia

  • Oriente’s latest round of financing will help expand its online lending venture in the Philippines
  • Oriente also runs the Finmas online lending platform in Indonesia with Sinar Mas group
Technology

Skype co-founder Geoff Prentice has raised US$20 million of debt financing for his start-up venture that targets financial inclusion in Southeast Asia, as innovations in the region’s payment system bring greater competition in the field.

Hong Kong-based Oriente Investment raised the fresh capital from investment management company Silverhorn Group to expand its Philippine online lending platform, known as Cashalo, where about two-thirds of adults do not have a banking account. Oriente also runs an Indonesian platform known as Finmas.

The latest funding can be increased to US$50 million, the company said in a statement on Wednesday. Oriente raised US$105 million in its previous round of financing in November from its founders and other family conglomerates like Philippine JG Summit Holdings and Indonesian Sinar Mas Group.

“There is a long way to go,” co-founder Prentice said in an email comment. “We are very excited to expand our various inclusive financing solutions to more Filipino communities across the archipelago wherever they are, both online and offline,” he said.

Geoff Prentice, Skype co-founder. Photo: Handout

Prentice co-founded Skype and served as its chief strategy officer.

Silverhorn’s funding comes as competition in the Southeast Asian digital payment space increases with greater smartphone penetration rate. The market for digital payments in Southeast Asia will exceed US$1 trillion in transaction value by 2025, led by innovations in consumer lending and financing to small to medium-sized businesses, according to a 2019 study by Bain & Co, Google and Temasek Holdings.

Cashalo, run through a partnership with JG Summit’s unit Express Holdings, offers loans of US$40 to US$150 each with monthly interest rates of 2.95 to 4 per cent. Loans are sent in less than a day online, and can be approved in eight minutes offline at locations owned by its partners such as local retail stores.

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Since the launch of Cashalo in May 2018 and Finmas in August that year, the start-up has seen 14 million downloads and over 4.5 million users, with roughly equal split. In that time, its network of offline merchant partners has grown to more than 850 from 150.

According to the Asian Development Bank, only 34 per cent of Filipino adults had a bank account in 2017, just 12 per cent borrowed from a formal financial institution, and 35 per cent of cities and municipalities in the country had no banking offices. A Bangko Sentral ng Pilipinas’s financial inclusion survey in 2017 showed 40 per cent of adults rely on informal funding sources, like family members or pawn shops.

Grab raises US$850 million to expand into financial services

Last week, SoftBank-backed ride-sharing app Grab raised more than US$850 million from Japan’s Mitsubishi UFJ Financial Group and IT services firm TIS Inc to offer lending, insurance and wealth management products and services for Southeast Asian consumers and small businesses.

“From big-tech like Google, Facebook, Amazon to others like Samsung, Uber, Grab, everyone is looking at payments or looking at how to do more in this space,” said Prentice.

Oriente is not competing with payment providers, or those that offer solutions like online payments or insurance built on top of existing infrastructures, he added. The company goes a step further because it is building the infrastructure that allows for a ‘pay later’ or other digital credit solutions to be deployed easily with thousands of merchant partners, both online and offline.

“We are laser-focused on building the infrastructure that will serve as a gateway for tens of millions of unbanked and underserved people to access the financial services they deserve by allowing them to create a financial identity, access affordable credit, build a credit profile that enables them to take control of their financial future.”

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