Fintech firm Validus acquires Citi Singapore's small business banking unit's loan book

Singapore-based Validus will take over outstanding CitiBusiness loans, which are still valid. PHOTO: ST FILE

SINGAPORE - SME lending platform Validus will acquire the loan portfolio of Citi Singapore's small business banking unit, in a move that is expected to support the fintech firm's plans to double its lending in the next year.

CitiBusiness, which offered small- and medium-sized enterprises (SMEs) cash management and credit facilities, was closed in August last year - two months after the decision was announced.

The Straits Times understands that Singapore-based Validus will take over outstanding CitiBusiness loans, which are still valid. The firm said it will offer the customers more solutions in terms of financing.

Validus declined to disclose details of the transaction including its value, citing confidentiality undertakings.

Its co-founder and executive chairman Vikas Nahata said the CitiBusiness acquisition will allow the company to rapidly expand its customer base and loan book, and also benefit Citi customers transferred to Validus.

"Through our digital platform, they will be able to access additional financing solutions to grow their business, financial services such as business accounts, cards and money transfers, and tools to manage their business finances in a smarter and more efficient way," he said.

Last April, Citi announced its exit from its consumer franchises in 13 markets where it does not have the scale needed to compete. These retail services are still offered from four wealth hubs, Singapore being one of them.

Mr Roy Phua, Citibank Singapore's head of mortgage and CitiBusiness, said: "Our priority is to ensure a smooth transition of our customers and loans to Validus, who we believe can continue to serve them and meet their needs."

The transfer of the portfolio is expected to be completed by next month, and marks Validus' second acquisition so far. Last year, it acquired KlearCard, a business payments and expense management technology platform that allows companies to issue virtual corporate cards instantly with spend control features.

Mr Nahata told ST that Validus is building a virtual business account by integrating KlearCard's technology with its platform.

These virtual business accounts will include payments, card and spend management services, and will be launched for Singapore soon and Indonesia shortly after, he said.

Validus, which holds a capital markets services licence from the Monetary Authority of Singapore, provides growth financing to SMEs via funds from individual and institutional investors.

It has disbursed over $1.6 billion across more than 50,000 loans to small businesses in Singapore, Vietnam, Indonesia and Thailand since it was launched in 2015. Its average loan size is $150,000 here.

The company - whose investors include Temasek-backed Vertex Growth and Vertex Ventures Southeast Asia & India, and Kuok family-linked K3 Ventures - expects to double total loans disbursed in the next 12 months.

Mr Nahata added: "With access to robust ecosystems of alternative credit data and solid data analytics capabilities... (we have been able to maintain) extremely low non-performing loan rates of below 1 per cent on a group level."

Alternative lenders like Validus aim to plug the financing gap by targeting SMEs that might be underserved and simplifying loan applications - usually done online, and requiring fewer supporting document and no collateral.

Some incumbent banks are also making it easier for SMEs to access funds. For example, Singapore's largest bank DBS has made over 14,000 collateral-free loans totalling more than $6.4 billion to SMEs here since the start of the pandemic, with 90 per cent of loans going to micro and small businesses.

It also introduced a digital loan acceptance solution to its SME customers last year on its online corporate banking platform Ideal.

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