$50 M facility secured by Validus from HSBC to strengthen digital lending for Indonesian MSMEs
The establishment of a debt facility from HSBC of up to $50 million under the ASEAN Growth Fund strategy was announced on Monday by Validus, a digital platform for lending to small and medium-sized enterprises (SMEs) with its headquarters located in Singapore.
The goal of Validus, according to a statement, is to assist micro, small, and medium-sized enterprises (MSMEs) in Indonesia with financial inclusion by addressing the obstacles they face in obtaining financing.
The facility will be made available by Batumbu, an Indonesian subsidiary of Validus that is currently the country’s largest digital SME financing platform.
It should be mentioned that Batumbu has continuously produced EBITDA margins above 50% and has experienced rising profits for more than two years.
This debt facility aims to close the financing gap in Indonesia while simultaneously assisting MSMEs there in surmounting financial obstacles and amplifying their contribution to the nation’s economic growth. It will do this by providing more easily accessible financing options.
According to Validus, who cited Indonesia’s Ministry of Economic Affairs, the country has 64.2 million MSMEs, which account for 61% of GDP and 97% of all employment.
According to a World Bank analysis, Indonesian MSMEs have a difficult time obtaining funding because of the strict standards set by banks.
According to the report, MSME loans make up only 20% of all bank loans, despite numerous government initiatives.
Citing the International Finance Corporation, it calculated that there is a $234 billion financing gap for MSMEs.
“This long-term partnership with HSBC builds on our ongoing efforts to bridge the financing gap for MSMEs in Indonesia,
“We will continue to pioneer innovations and drive advancements in the lending space,” said Nikhilesh Goel, Co-founder and Group Chief Executive Officer of Validus.
He stated that the company is dedicated to opening up new business opportunities, promoting economic growth, and improving financial inclusion by utilizing Batumbu’s distinct position as the largest and only profitable digital SME financing platform in the nation.
“We are honoured to work with HSBC on this pivotal initiative, which will enable Validus to make a larger impact on the Indonesian economy,” he added.
