Kredivo Go-Public Immediately via SPAC, Aim for Fresh Funds of 6,1 Trillion Rupiah

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

Both FinAccel and VPCB have entered the stage of a definitive agreement for their business combination and filed documents with the US Securities and Exchange Commission (SEC). VPCB itself has completed its IPO in March 2021.

With this merger, FinAccel will have a pro-forma equity valuation of around $2,5 billion, assuming no redemption. FinAccel will be a startup unicorn from Indonesia after this transaction is completed.

In a virtual press conference held by the company for a number of media today (03/8), FinAccel Co-Founder and CEO Akhsay Garg explained that the opportunity to become a public company came because FinAccel and VPC have a strong business relationship. He sees VPC as a quality and reputable firm.

Moreover, to get fresh funds in large quantities and at one time is not possible for a company if it is done through private funding. Therefore, this opportunity came and FinAccel wanted to make the most of it.

“So we did not choose the IPO, but chose the best funding option. This decision was not sudden, but an opportunity presented itself," Garg said.

Related process listing on the NASDAQ, this transaction is expected to generate over $430 million in fresh funds (over 6,1 trillion Rupiah) in cash on the combined company balance sheet. Of the total funds, represents a contribution of up to $256 million in cash that has been entered into the account of the VPCB representative (assuming no PVCB shareholders redeem their shares).

Then, for $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 Pegs.

Garg explained that the opening of market access in the United States stock exchange opens opportunities for companies to obtain much greater liquidity. The United States Stock Exchange is indeed the "home" for many large technology companies in all parts of the world. From Asia alone, Sea, Alibaba, and Grab soon.

It also opens options for dual listings, by taking the floor on the Indonesia Stock Exchange. Although the decision can not be specified further.

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

Comments about the label unicorn that will be carried by the company, Garg confirmed this. But according to him, label unicorn and IPOs are not something the company has been aiming for since its inception. He wants to continue the company's vision of deepening the penetration of digital credit cards, which still have wide opportunities in Southeast Asia.

Development Kredivo

In his track record, Kredivo distribute instant credit financing to users for purchases at E-commerce and offline as well as cash loan funds, based on real-time decision powered by self-made AI technology. Total users almost reach 4 million people and work with 8 out of 10 platforms E-commerce at the forefront of Indonesia.

User base Kredivo has doubled over the past 10 months and annual revenues have also doubled over the past seven months. The company claims to lead the industry in the Buy Now, Pay Later (BNPL) category, with share wallet at least 50% in the majority e-commerce merchants in Indonesia.

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

Merchant Kredivo surveyed were able to record an increase in the average number of purchases (average basketball size) more than doubled, increased transaction frequency up to three times, with more than 50% merchant it says Kredivo can zoom in cart conversion rate or the number of successful transactions on time checkout.

SPAC Trends

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

In addition, in a statement quoted by Kumparan, GoTo CEO Andre Soelistyo said it was a joint company Gojek-Tokopedia 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.

The popularity of SPAC arises because the conventional IPO process is considered more complicated, expensive, and more time-consuming for technology 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, 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.