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Economic recovery: KB Finansia gets financial boost from IFC
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(Courtesy of PT KB Finansia Multi Finance)
T
he International Finance Corporation (IFC), a member of the World Bank Group, has provided a US$50 million financial injection to PT KB Finansia Multi Finance (KBFMF), which is well known for the brand KreditPlus.
The fresh money will allow the company to reach a wider network of work partners, especially those from micro, small and medium enterprises (MSME) in Indonesia, which have been the backbone of the national economy.
The multifinance company was founded in 1994 under the name PT Finansia Multi Finance. Through its KreditPlus corporate brand, the company provides financing for motorbikes, cars and durable goods.
KreditPlus started its digitization process in 2014 with the aim of becoming the best digital financial service provider in Indonesia. It joined hands with an e-commerce website as a payment gateway and created a digital credit application system (e-form).
The KB Kookmin Card, which is the card business division of South Korea-based KB Financial Group, changed the company's name to PT KB Finansia Multi Finance.
KBFMF director Peter Halim said the IFC’s investment was expected to provide a boost for a national economy currently hard hit by the COVID-19 pandemic.
This crucial financial injection will help KBFMF focus on growth strategy, which includes plans to diversify its financial product offerings and further digitize operations.
"Despite the economic challenges due to the global pandemic, the investment will allow us to continue our lending program, as well as sustain and support the recovery of Indonesia's low-income households and micro, small, and medium enterprises," Peter said in an official statement.
“This funding is an important milestone and proof of trust gained from international institution by KBFMF. Aside from IFC, KBFMF has also received a $200 million loan from SMBC, HSBC, KEB Hana, ANZ, SCB and DBS in 2020.”
IFC’s funding came following the signing of a business agreement on Dec. 9 between IFC and KB Financial Group, which is also the Korea's largest financial group with an asset of $554.6 billion.
Under the agreement, they are expanding the businesses to Southeast Asia, including Indonesia, through joint product development, financing and investment.
Being a key player in Indonesia's multifinance sector, backed by KB Kookmin Card as one of the largest specialized credit finance companies in South Korea, KBFMF will capitalize on IFC’s financial injection to diversify its funding base and strengthen its balance sheet.
With more extensive catering to MSMEs, the company hopes to be able to help ease the government’s national economy recovery efforts, given that MSMEs employ 89 percent of the nation's workforce.
Being the main source of funding for MSMEs operating at the bottom of the economic pyramid, multifinance companies (MFCs) are now facing a liquidity squeeze because of the relaxed repayment requirement due to the pandemic.
Moreover, banks have stopped or significantly reduced lending to MFCs, which unlike banks, do not have access to deposits or liquidity support from the central bank.
Azam Khan, IFC's country manager for Indonesia, Malaysia and Timor-Leste, said the MSMEs sector in Indonesia had been hit hard by the pandemic. This sector’s recovery will be key to stemming job losses and reigniting economic activities.
"Given the devastating impacts of the pandemic, IFC's funding aims to support the country's efforts to build back better for a more inclusive and resilient future," Khan said.
Info about PT KB Finansia Multi Finance, please contact:
Rere Sarwono
Phone: +62 813-1933-1840
Email: rere.sarwono@finansia.com
