Kredivo to Go-Public via SPAC, Aiming for 6.1 Trillion Rupiah Funding

Kredivo's parent company FinAccel, announced to become a public company on the NASDAQ through SPAC. Kredivo is to merge with VPC Impact Acquisition Holdings II (NASDAQ: VPCB) shell company, an affiliate of Victory Park Capital (VPC), a global investment firm provided credit facilities to Kredivo several times.

Both FinAccel and VPCB have entered a definitive agreement for merger and filed documents with the US Securities and Exchange Commission (SEC). VPCB alone has completed its IPO in March 2021.

With this merger, FinAccel will have a pro-forma equity valuation around $2.5 billion, assuming no redemption. FinAccel will be the next unicorn startup from Indonesia once the transaction is finalized.

In a virtual press conference held by the company for several media (03/8), FinAccel's Co-Founder and CEO, Akhsay Garg explained that the opportunity to become a public company arrived as FinAccel and VPC have a strong business relation. He values VPC as a quality and reputable firm.

Moreover, in terms of a huge fresh funds at one time is not possible for a company if it is only through private funding. Therefore, when this opportunity arrived, FinAccel wanted to make the most of it.

“We did not choose to IPO, but the best funding option. This is not a sudden decision, but an opportunity appeared at its finest," Garg said.

Regarding the NASDAQ listing process, this transaction is expected to generate over $430 million (over 6.1 trillion Rupiah) in cash on the company's combined balance sheet. The total funds represents a contribution of up to $256 million in cash sent into the account of the VPCB representative (assuming no PVCB shareholders redeem their shares).

Furthermore, $120 million in private placement (PIPE) led by Marshall Wace, Corbin Capital, SV Investment, Palantir Technologies, Maso Capital, and VPC sponsors, along with an additional $55 million equity commitment from former investor NAVER (via NAVER Financial) and Square Peg.

Garg explained that the market access opening on the US stock exchange creates opportunities for companies to get much greater liquidity. The United States Stock Exchange is indeed the "home" for many big tech companies worldwide. From Asia alone, Sea, Alibaba, and Grab ware to be listed in the near future.

He also stated dual listing is an option, by going public on the Indonesia Stock Exchange. Although the decision is yet to be further specified.

Furthermore, Garg explained that the merger's fresh funds will later become the company's ammo to strengthen its position in Southeast Asia, there will be regional expansion plans to Vietnam and Thailand, and the development of new business lines.

His comments on the unicorn status in the future, Garg confirms this. However, he said, unicorn and IPOs were not something the first company's target since the establishment. He wants to continue the company's vision of deepening the penetration of digital credit cards, which still have wide opportunities in Southeast Asia.

Kredivo's growth

PayLater becomes a popular payment option for Indonesia's e-commerce / Kredivo-Katadata

In its track record, Kredivo disburses instant credit financing to users for e-commerce purchases and offline as well as cash loans, based on real-time decisioning powered by self-made AI technology. The company's total user has nearly reached 4 million and collaborates with 8 of the 10 leading e-commerce platforms in Indonesia.

Kredivo's user base has doubled over the past 10 months and its annual revenue has also doubled over the past seven months. The company claims to lead the Buy Now, Pay Later (BNPL) industry, with a wallet share of at least 50% in the majority of e-commerce merchants in Indonesia.

In Indonesia, credit card user penetration from the middle class segment is less than 10%, through a partnership with Kredivo, merchants are able to increase the value of their consumer spending.

The surveyed Kredivo merchants were able to record an increase over two times up in average number of purchases (average basket size), up to three times increase in the frequency of transactions, with more than 50% of these merchants saying Kredivo could increase its cart conversion rate or the number of transactions they made. successful at checkout time.

SPAC trends

SPAC becomes a buzzword since the beginning of this year. Besides Kredivo, other local companies are also interested to use this scheme, including Tiket.com. The company, which is now valued at more than $1 billion, is reportedly considering SPAC to be its vehicle for listing on the stock exchange. Rumor has it that they will cooperate with the COVA Acquisition Corp. (COVA) blank check company, forming a combined company worth more than $2 billion.

In addition, in a statement quoted by Kumparan, GoTo CEO Andre Soelistyo said the Gojek-Tokopedia joint company is also targeted to be listed on the stock exchange before the end of 2021.

And as previously known, other unicorns Traveloka and Bukalapak have also reportedly started exploring the option of going public with SPAC vehicles.

SPAC popularity arises as the conventional IPO process is considered more complicated, expensive, and time-consuming for tech startups. In the United States, 2020 is a significant growth momentum for going public through blank check vehicles. There are more than 200 SPACs raising approximately $799 billion.

However, currently there is a decline in SPAC prices and institutional investors' interest in entering PIPE; it is possible for startups to rethink going public through this mechanism.

Withersworldwide partner Joel Shen argues that the resurgence of SPAC's popularity can be attributed to low interest rates, abundant liquidity in the market due to the stimulus from the US central bank system, and an increase in the number of acquisition targets, especially in the technology sector.

–Original article is in Indonesian, translated by Kristin Siagian