Jakarta-headquartered Kredivo, a digital credit platform for retail borrowers across Indonesia, and Partners for Growth V, L.P. (PFG), a venture debt firm in the U.S. and Australia, announced today the closing of a debt line of up to US$20m to fund loans for Kredivo’s borrowers in Indonesia.
The deal marks a major milestone for both firms: for Kredivo, it is the largest deal in its history with an offshore (international) lender; for PFG, this represents one of their largest deals in Asia Pacific (APAC) and their first in Indonesia.
The closing of this deal will help to fuel momentum that Kredivo has enjoyed in the past 18 months, where its transaction value and loan book have been growing at 40% and 35% per quarter, respectively.
In addition, Kredivo will use the funds to diversify its loan book, currently predominantly domestically originated. The partnership between the two firms is structured in the form of a credit line where Kredivo will be able to access up to US$20m of debt, on-demand.
Indonesia is one of the most credit-starved countries in Asia, with less than 3% of its population in possession of a credit card and less than 5% having access to unsecured credit from banks.
The gap has led to the growth of the digital lending industry, which is filling the gap opened up by the lack of lending from banks from other traditional financial institutions. While the industry is primarily fueled by peer-to-peer lending models, the deal between Kredivo and PFG represents a significant departure from the norm.
