Validus Secures $50 Million from HSBC for Indonesia SME Financing

Validus, a Singapore-based digital lending platform serving small and medium businesses (SMEs), has received $50 million in debt financing from HSBC under the ASEAN Growth Fund strategy. This funding will be utilized to promote financial inclusion of micro, small, and medium enterprises (MSMEs) in Indonesia.

Indonesia's MSME Landscape: Potential and Challenges

With 64.2 million MSMEs contributing 61% to Indonesia's GDP, the country presents immense potential for growth. These MSMEs employ approximately 119.6 million people, representing 97% of the nation's workforce. However, only about 17.5 million MSME players are actively engaged in the online ecosystem and e-commerce.

• One of the key challenges facing Indonesian MSMEs is limited access to financing.
• Commercial banks often impose stringent operational, reporting, and collateral requirements, making it difficult for MSMEs to secure loans.
• Despite government initiatives, only about 20% of bank loans are allocated to MSMEs.

Validus's Approach to Bridging the Financing Gap in Indonesia

Validus, founded in 2015 by Vikas Nahata and Nikhilesh Goel, has developed a supply chain-focused lending model that leverages non-traditional data access through partnerships with traditional banks and international institutions. The company has expanded its operations to Indonesia (Batumbu), Thailand (Siam Validus), and Vietnam (Validus Vietnam).

• Validus's approach addresses the limitations of traditional credit evaluation methods used by banks in the Southeast Asia region.
• The company provides accessible working capital to SMEs, enabling them to grow their businesses and contribute to job creation and national development.

Validus's Impact on Indonesia's MSME Ecosystem

Validus's digital lending platform provides crucial financial support to Indonesian MSMEs, addressing their need for short-term working capital. The company has established over 100 unique partnerships throughout the Southeast Asia region, enabling it to deliver robust financing solutions.

• Validus is positioned as the largest SME financing marketplace in Southeast Asia, based on its outstanding loan book and monthly loan disbursals, currently averaging $150 million per month.
• The company's commitment to financial inclusion in Indonesia is evident through its positive impact on the MSME ecosystem, contributing to economic growth and job creation.

Validus's Financial Performance and Future Outlook

Validus has experienced significant growth in revenue and net profits over the past three years. The company's Indonesia business, its largest market, has been net profit positive since 2022 and has generated positive cash flow for the group.

• Validus has achieved a 69% CAGR in its consolidated Group revenues over the past three years.
• The company's EBITDA margins exceed 50%, and it aims to achieve consolidated Group cash flow positivity by early next year.
• Validus employs over 300 staff across five countries and has raised approximately $75 million in total equity funding from investors such as Vertex Ventures Southeast Asia and India, Vertex Growth, FMO, 01Fintech, NongHyup Financial Group, Norinchukin Bank, Aizawa Asset Management, and Lotte F&L.