Fatfish Group to launch corporate BNPL for South East Asia via Smartfunding

Technology venture firm Fatfish Group (ASX: FFG) is launching a buy now, pay later (BNPL) business for corporates across South East Asia via its investee company, Smartfunding.

In addition, Fatfish is upping its stake in Smartfunding by entering a binding term sheet to acquire a direct 19.9% shareholding. The firm’s subsidiary Abelco Investment Group already holds a 58.8% stake in Smartfunding.

Fatfish will also provide marketing and technical assistance to Smartfunding to launch the BNPL financing platform, which will initially launch in Singapore before being rolled out across South East Asia.

BNPL platform

Singapore-incorporated Smartfunding is an existing investee company of Fatfish’s Sweden-listed subsidiary Abelco Investment Group, which in turn holds its 58.8% stake via its subsidiary, Fintech Asia Group.

Smartfunding is licenced by Singapore’s central bank, the Monetary Authority of Singapore (MAS), to conduct securities transactions.

The business’ current operations include a peer-to-peer online lending platform providing short to mid-term working capital loans to small to medium enterprises (SMEs) in Singapore and other international markets.

Smartfunding’s planned BNPL platform will enable corporations to apply online for a loan amount ranging between S$25,000 (A$25,000) and S$1 million (A$1 million), intended for the procurement of equipment or services. The loan is to be repaid in instalments over a 12 or 24-month period at a “competitive” interest rate.

According to Fatfish, the capital to finance this new lending service will be provided by investors onboarded on Smartfunding’s online platform.

Market opportunity in South East Asia

While Singapore is one of the leading financial hubs in Asia, with a recorded total of US$3.44 trillion of total funds under management by licenced corporate entities in 2019, the BNPL business model is still considered to be in its infancy in South East Asia.

Fatfish and Smartfunding plan to launch the BNPL corporate program in Singapore and, once proven, roll it out across the broader region.

BNPL has been demonstrated as a proven business model in Australia and Fatfish said it is expected to “resonate well in untapped markets such as Singapore and the rest of South East Asia”.

In particular, SMEs’ demand for alternative financing is forecast to continue growing as traditional lenders tighten their credit facilities and BNPL offers an attractive higher yield in the current low interest rate environment.

The platform’s automated digital process and efficiency to provide partial or pseudo neo-banking functionalities are also expected to be seen as benefits.

“The successful buy now, pay later business model has seen success in Australia and it has always been the core proposition of Fatfish to assist its investee companies to identify and launch new business strategy across verticals that have been proven in other markets,” Fatfish said in today’s announcement.

Increased stake

Fatfish will directly acquire a further 19.9% shareholding in Smartfunding for a total consideration of $519,000 via script at $0.047 per share.

Other remaining shareholders of Smartfunding have given Fatfish a six-month option to purchase an additional 10.1% stake in the company.

Should Fatfish choose to exercise this option, it would need to seek approval from MAS to purchase these additional shares.

“The acquisition of the additional direct stake in Smartfunding is in line with [Fatfish’s] strategy to increase stake in strategic investee companies over time in areas of focus and with great upside potential,” Fatfish said.

Fatfish has a large number of companies in its investment portfolio, including iCandy Interactive (ASX: ICI) which has seen recent success in the mobile gaming world.

The company last month raised $1.5 million in a strong placement, via leading Melbourne-based boutique, Peak Asset Management.