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Kredivo announced today it has secured another $100 million debt facility from Victory Park Capital (VPC). This doubles the Indonesian digital lending and credit platform’s total warehouse financing facility from VPC to $200 million. The first round was closed in July 2020.

Kredivo is operated by Singapore-based fintech FinAccel. This is the largest loan facility it has raised so far, and is VPC’s biggeast debt commitment to a fintech company outside of the United States and Europe, as well as its only investment in Southeast Asia. Kredivo will use the debt facility to help achieve its goal of serving 10 million customers in Indonesia.

Other notable startups that have received debt financing from VPC include Razor Group, factory 14, Konfio and Elevate.

Kredivo has more than three million customers and offers two main types of lending products: zero interest 30-day ‘buy now, pay later’ financing for e-commerce and offline purchases, and three-, six- and 12-month installment loans with an interest rate of 2.6% a month, or a maximum annual rate of 53.36%. Kredivo chief executive officer Akshay Garg told TC that its ‘buy now, pay later’ services are typically used for small-value online purchases, while installment loans are used to finance bigger transactions, like laptops, home renovation or medical care.

While ‘buy now, pay later’ services like Klarna, Afterpay or Affirm offer convenience to customers in the United States or Europe, in emerging markets it also serves as a tool to build credit, especially in countries that have low credit card penetration, Garg said.

“Credit is one of the largest and most complex areas of the financial services ecosystem and the fact is that Indonesia is deeply underserved on that equation,” he said. Most banks only provide secured lending, like home or car loans, and unsecured lending is rare. Garg said there are only eight million credit card holders in Indonesia, which has a population of 270.6 million, and that number has not changed in 13 years.

One of the reasons for Indonesia’s very low credit card penetration rate is because banks are reluctant to give unsecured loans, especially to younger customers.

“What we’re solving is less a convenience problem and more an access problem. We’re putting unsecured credit, or the ability to buy on credit, in the hands of urban millennials for the first time, simply because banks are just not providing them access to credit cards,” said Garg.

He added that Kredivo’s effective risk-scoring model allows to charge low interest rates, and its non-performing loan ratio is in the low single-digits, despite the economic impact of COVID-19, which Garg described as a “trial by fire.”

Like credit cards from banks, Kredivo also reports customers’ loan histories to Indonesia’s credit bureaus, so they can build credit scores. “What we’re doing is a building Indonesia’s first real digital credit bureau from the ground up, and I think our risk metrics show that this is not just for the sake of some funky innovation, but something that is delivering real performance,” Garg said.

In a statement, VPC partner Gordon Watson said, “We have been impressed with the resilience and growth of the business and look forward to deepening our partnership with Kredivo. The company presents a unique combination of growth, scale, risk management and financial inclusion in one of the most exciting emerging markets in the world.”