Supply chain finance outfit CapitalBay gets Malaysian regulatory green light
Published 16 May, 2019
The registration licence was presented today in a ceremony hosted by the Chairman of SC, YBhg Datuk Syed Zaid Albar and attended by the Minister of Finance, YB Tuan Lim Guan Eng.
Established in 2016, CapitalBay has been working with multiple banks in Southeast Asia by enabling digital supply chain financing for their clients through CapitalBay’s platform. With the P2P approval, retail investors are now able to access the platform, allowing them to participate in high-quality financing deals that were previously only available to banks and institutional funders. Through this initiative, retail investors are able to invest alongside banks. This is in line with Prime Minister Tun Dr Mahathir Mohamad’s vision of “shared prosperity” where the public can enjoy equitable growth.
Financing Business Payments through Supply Chain Finance
CapitalBay specializes in short-term working capital financing, offering products such as invoice financing to small and medium enterprises (SMEs) across various industries. Its financing solutions enable B2B suppliers to be paid earlier for their outstanding invoices by allowing them to sell their invoices for cash upfront. As for B2B buyers, CapitalBay provides financing solutions such as deferring payment due date by paying their suppliers first. Since starting operations in Q4 2017, CapitalBay has financed over 1,300 B2B transactions worth RM 75 million.
“Cashflow is the lifeline for many businesses. Today, many small businesses struggle with cashflow and traditional lending models find it difficult to fulfill this gap. We believe that by shortening the cash conversion cycle for businesses, this unlocks cashflow for them to grow their business, which is the basis for setting up CapitalBay,” says Ang.
Supporting Businesses while Earning High Returns
“With the P2P approval, we would like to invite investors to join us in our mission to provide smart and inclusive financing to businesses across Southeast Asia. This will enable businesses to grow and prosper, ultimately improving the livelihoods of the business owners, employees, and the community we all live in,” says the co-founder Ang Xing Xian.
CapitalBay added that its investors can expect to earn double-digit annualized returns up to 18%. Furthermore, its business payment financing products have shorter tenures (typically 2 months), therefore providing more flexibility with lower risks.
According to CapitalBay, investors can take further comfort as most of its financing deals are backed by invoices due from large credible institutions such as multinational companies (MNCs), blue-chip companies and government-linked entities with lower default risks.
Zero Default Since Launch with Proprietary Risk Scoring Model
Traditionally, banks’ credit assessment processes are tailored for larger deal size, with emphasis on business financial statements and collateral. This results in a high rejection rate for SMEs who require smaller loan sizes and shorter financing tenures as it may not be commercially viable for banks. CapitalBay leverages on leading technology to build a unique payment risk scoring model that predicts the risk of each transaction on its platform through machine learning. This opens up access to financing for the under-served SMEs. Since its launch, CapitalBay’s data-driven approach has kept its default rate at 0%.
CapitalBay was named “The Best Fintech Platform for Supply Chain Finance in Asia Pacific” and “The Best Financial Supply Chain Management in Malaysia” by The Asian Banker in May 2018 in Beijing, alongside other award recipients that include top global banks and leaders such as Tan Sri Zeti Akhtar Aziz.