Funding Societies | Modalku, theunified digital finance platform for micro, small and medium enterprises (MSMEs) in Southeast Asia today announced signing the third credit facility* with HSBC under its ASEAN Growth Fund.
The transaction, an accumulative commitment of over $100 million, includes the annual credit facilities extended to Funding Societies, and reaffirms HSBC’s support for MSMEs via the platform.
This transaction, which is amongst HSBC’s “largest” asset-backed secured facilities extended to digital SME lenders in Southeast Asia, will deepen and extend Funding Societies’ reach to providing “credit access to underserved MSME segments in the region.”
Although the APAC region has grown its middle-class and gained tremendous traction in terms of increasing access to formal banking services and digitalising its commercial environment, the region still has “a $2.5 trillion credit access gap, making up over half of the global shortfall in small business financing.”
Up to 99.9% of enterprises are MSMEs contributing to “35% to 69% of each country’s gross domestic product.”
Co-founder and Group CEO of Funding Societies, Kelvin Teo, said that the continued support from “a global bank such as HSBC is a testament to its commitment to support the development of digital platform businesses such as theirs and MSMEs as we ride through a two-decade high interest rates impacting the global economy.”
This enables us to further explore scalable debt financing for growth and profitability, and bolster financial inclusion for the underbanked and underserved SMEs in the region.”
As part of its ASEAN Growth Fund strategy, this transaction underlines a scalable solution to “enable digital lenders like Funding Societies to raise additional equity capital and debt financing through different channels.”
HSBC will act as the structuring bank, lender, account bank, FX counterparty, facility and security agent in providing “a scalable and pan-regional financing solution to support Funding Societies’ business expansion in the region.”
The $1 billion HSBC ASEAN Growth Fund was launched in March 2024 to enable Singapore-based digital platform businesses “supporting e-commerce in the region to achieve economies of scale across multiple international markets, grow their asset portfolios, and advance along the corporate lifecycle.”
Together with the New Economy and Venture Debt Fund, HSBC Singapore offers a “suite of financing solutions for new economy businesses across different stages of growth.”
This announcement comes at the heels of Funding Societies’ most recent investments from Maybank in September.
Since its inception in 2015, Funding Societies has disbursed “over US$4 billion in business financing, positively impacting more than 100,000 businesses across Singapore, Indonesia, Malaysia, Thailand, and Vietnam, as well as processed an annualised US$1.4 billion in payments GTV (gross transaction value) since its entry into payments in late 2022.”
Funding Societies | Modalku is said to be the “largest” unified SME digital finance platform in Southeast Asia.
It is licensed in Singapore, Indonesia, Thailand, “registered in Malaysia, and operates in Vietnam.”
The Fintech company provides “$1 billion annually of business financing to small and medium-sized enterprises (SMEs).”
It has also made milestones including its acquisition of regional digital payments platform CardUp and “co-investment into Bank Index in Indonesia.”
Funding Societies | Modalku is reportedly backed by the following: SoftBank Vision Fund 2, Maybank, Khazanah Nasional Berhad, CGC Digital (the digital arm of the Credit Guarantee Corporation Malaysia Berhad), SBVA (previously SoftBank Ventures Asia), Peak XV Partners (previously Sequoia Capital India), Alpha JWC Ventures, SMBC Bank, BRI Ventures, VNG Corporation, Rapyd Ventures, Endeavor, EBDI, SGInnovative, Qualgro, and Golden Gate Ventures.