How is Akulaku Funding its Vision to Broaden Financial Inclusion Across Southeast Asia – and Prepare for an IPO?

More than seven out of 10 people in Southeast Asia either do not have a bank account or are underbanked, lacking access to credit cards, consumer loans and other services beyond basic savings accounts.¹ On the other hand, the vast majority of the region’s population have access to smartphones.² This has created a leapfrog opportunity for financial technology (fintech) start-ups to bring financial services straight to consumers in the region via their mobiles.

Firms like Indonesia’s Akulaku have benefited from and helped to drive the rapid expansion of the region’s digital economy in the wake of the Covid-19 pandemic. Since 2019, usage of apps from digital banks and pure-play fintechs has grown at an astounding compound annual rate of 61% and 50%, respectively, in the six largest economies of the region: Indonesia, Thailand, Singapore, Vietnam, Malaysia and the Philippines.³ This has underpinned the 27% annual growth in the region’s digital economy revenue during that period to an estimated US$100 billion in 2023.

Founded in 2016, Akulaku started out by offering buy now, pay later (BNPL) services in its home market before branching out to peer-to-peer lending under its Asetku brand and digital banking under Bank Neo Commerce. It now offers digital credit, digital banking and other financial services. Akulaku has also expanded geographically into Malaysia, the Philippines, and Vietnam, serving more than 10 million users since its inception.⁴

Balance sheet clean-up

With a view to securing funding for further regional expansion and cleaning up its balance sheet in preparation for a potential initial public offering, Akulaku asked HSBC Singapore to structure an innovative US$100 million two-year debt facility to refinance its maturing loan facilities.

This first-of-its-kind facility is secured by Akulaku’s streams of commissions on the loans it arranges, which serve as the first and primary source of funds for repaying the loan. HSBC’s solution allows the company to monetise a stable stream of cashflows from its own loan portfolio in order to recapitalise its financing at the holding company level without diluting shareholders.

“This funding will play a pivotal role in advancing our ongoing initiatives to meet the financial needs of underserved customers throughout Southeast Asia. Akulaku remains steadfast in its commitment to leveraging innovative technologies to provide seamless access to digital finance in the region and enhance the lives of our users,” added Zhang.

Under the deal’s structure, direct payments of Akulaku’s commission income are made into an HSBC escrow account, enabling monitoring of ongoing collections to ensure they are sufficiently to service the debt. Adequate cash reserves also required to cover repayment and a steady monthly amortisation has been designed to achieve a generally quick and constant reduction of Akulaku’s debt.

Indonesian unicorn

The Akulaku Group is one of the largest fintech players in Indonesia and considered a ‘unicorn’ because of its USD2 billion valuation. The firm has raised USD520 million of funding from venture capital firms including IDG Capital, Qiming Venture Partners and Sequoia India, as well as from strategic investors like Ant Group, MUFG and Siam Commercial Bank.⁵

“This deal reinforces our commitment to support Southeast Asia’s leading new economy businesses as they grow and move through the capital-raising cycle, as well as reflecting a shared goal for Akulaku and HSBC of advancing financial inclusion in Southeast Asia.”