Kenanga Capital Islamic (KCI), a subsidiary of Kenanga Investment Bank Berhad, has invested RM30 million (US $7 million) in CapBay, a Malaysian multi-bank supply chain finance and peer-to-peer lending platform (KIBB).
CapBay’s Shariah-compliant supply chain finance business, CapBay Islamic, will benefit from the investment.
CapBay, which was founded in 2017, is a digital platform that allows SMEs to acquire flexible and cost-effective funding. It claims to have financed over 14,000 transactions totalling over RM1.4 billion (US $330 million) and assisting over 800 SMEs to date.
To deliver the answer, it has worked with a number of significant corporations, banks, and institutional investors.
CapBay launched a $20 million Series A investment in January, led by Singapore’s KK Fund and many Malaysian angel investors.
“The injection of funds will help accelerate the growth of Malaysian SMEs. With the launch of our Islamic receivables and working capital financing solutions, we believe that this will add another dimension to our efforts in supporting the SMEs in the country,” said Mohd Mokhtar Mohd Shariff, chairman of CapBay.
“We have been collaborating with CapBay to develop an Islamic fintech to serve a wide range of SMEs through a digital platform that enables a faster and more convenient process,” said Chay Wai Leong, group MD of KIBB.
CapBay bought a 49 percent share in KCI last year in order to launch an Islamic supply chain financing fintech. Beyond financial statement analysis, KCI gains from forecasting risk in each transaction by analysing thousands of data points such as previous connections, payments, contract quality, and other trends using machine learning. This data-driven methodology contributes to the revitalization of Islamic supply chain finance for the underbanked.
The desire for a Shariah-compliant solution has risen as the SME finance sector continues to develop fast. According to the Association of Islamic Banking and Financial Institutions Malaysia, by 2030, Islamic banking would account for half of Malaysia’s banking assets, as the industry’s expansion outpaces traditional banking.
According to a study by Fintech News Malaysia, CapBay is one of just 4% of Malaysia’s 233 fintech companies that are Islamic.
“The adoption rate of Islamic financing in Malaysia is growing: this is a clear reflection of the demand for Shariah-compliant products in the country. We noticed many of our clients seeking an Islamic alternative to our products, and we are catering to this growing demand,” added Mohd Shariff.