Thursday, May 23, 2024

Investree’s Shariah business still up in the air despite remaining bullish on Indonesia

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Despite its recent scandals, including alleged fund misappropriation by its previous CEO and high loan defaults, P2P platform Investree remains optimistic on the Indonesian market as it works on accessing its Series D funding, the start-up told IFN Fintech. Investree’s plan to re-enter the Islamic finance segment, however, remains unknown.

Investree Indonesia in January last year terminated its Shariah P2P operations as part of a move to set up a standalone Islamic unit as required by the regulator.

At that time, the then CEO Adrian Gunadi said the planned spin-off will operate under a different legal entity from Investree Radhika Jaya and promised further details in due time.

However, 16 months on, the platform has remained silent on that front; and it continues to be, even when Kok Chuan Lim, Investree’s co-founder and CEO of Investree Philippine, was asked by IFN Fintech last month.

To be fair, the Indonesian setup has been embroiled in multiple problems.

Most scandalous of which is Adrian, who also co-founded the start-up, resigning in January. Adrian’s departure was amid allegations of him diverting company’s funds to his personal bank account and using the firm as a guarantor for his personal financing needs.

Then there is the issue of bad debts and financial difficulties.

Investree has been struggling to recover its debts. Its TKB90 rate, which measures successful payment rate within 90 days, dropped to 83.56% as at the 21st May 2024; the industry average at the end of March was 97.06%. Year to date, the platform has disbursed IDR25.59 billion (US$1.6 billion) in financing.

The deteriorating asset quality has led to lawsuits. Lenders also raised concerns about the non-claimable insurance coverage on defaulted loans.

Compounding the troubles were concerns of a liquidity crunch following delays in disbursement of its EUR220 million (US$235.29 million) Series D funding secured in October 2023.

Putting out fires

Kok assured IFN Fintech that Investree is handling its increasing bad debts. It is examining its business pipeline and checking its project portfolios to mitigate loan risk.

Kok also said that Investree is attempting to open communications with borrowers with good intentions to repay their loans by, among others, partnering with authorized third parties to speed up the loan repayment collection process. He did not disclose how far these discussions have progressed.

On the Series D disbursement, which was led by Qatari investment group JTA Holdings, Kok said both parties “are committed to adhere to the principles of confidentiality that are customary in such arrangements”.

Without confirming whether any disbursements have been made, Kok said their partnership is “speeding ahead”. A joint venture between the two was established last year under the name JTA Investree Consultancy and it has “actively engaged in obtaining the necessary approvals for fund disbursement”.

It is understood that the company intends to overhaul or restructure its operations in light of Adrian’s misconduct and its financial troubles; specific details, however, were not shared.

Indonesia has licensed seven Islamic fintech-based financiers which operate alongside 94 conventional operators at the end of Q1 2024, according to official data.

Rabeh expecting CMA license “any time” now

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Flag of Saudi Arabia on blackboard

Saudi Islamic fintech start-up Rabeh is expecting to secure a full license from the Capital Market Authority (CMA) imminently, IFN Fintech has learned.

Founded in 2022, Rabeh offers Shariah compliant investment opportunities through its equity crowdfunding platform. It is currently operating under the supervision of the CMA and Saudi Central Bank as part of their sandboxes.

The start-up raised funds for six projects last year and generated a US$250,000 profit, which was channeled back into the company, Founder and CEO Mohammed Alsolami told IFN Fintech. The platform currently has 30 companies in its pipeline, with 10 projects slated to go live this year; it forecasts a US$3 million profit for 2024.

According to Mohammed, Rabeh is intensifying its activities to expand its reach to investors within and outside the Kingdom by launching several new technical features including a user-friendly interface, multilingual support and integration with payment gateways to facilitate global transactions.

The start-up plans to roll out targeted marketing campaigns and strategic partnerships to widen its investor base. 

“Also, Rabeh is innovating its own blockchain infrastructure to operate all type of sensations and workflow with most advanced technologies,” according to Mohammed.

The start-up in March raised SAR3 million (US$799,458) in pre-seed funding from Mjalis Investment Company and angel investors, bringing its valuation to SAR30 million (US$7.99 million).

Mohamed shared that Rabeh employs several strategies to create a secondary market to enhance activities such as exchanging ownership, knowledge, and consultancy.

“We are currently building on technologies such as blockchain to facilitate secure and transparent transactions. Additionally, we employ progressive risk management tools and give investors and entrepreneurs full access to expert advice to reduce risks and increase their success rates.”

Algbra powering banking support for Shoal

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UK-based Shariah compliant fintech Algbra has commenced work on providing digital banking support for Shoal, the sustainable finance platform linked to Standard Chartered Bank (StanChart).

Before the end of 2024, this Algbra–Shoal partnership aims to roll out its first product of a ‘Sustainable Savings Pot’ offering, which will allow savers to earn a competitive rate of interest while their money is used to support sustainable development and the fight against climate change.

The target is part of an investment deal by StanChart unit SC Ventures, which also incubated Shoal. The deal lets Shoal leverage Algbra’s technology capabilities to distribute its products to UK retail customers while Algbra will incorporate Shoal as part of its ESG-centric B2B solutions globally.

Algbra Founder and CEO Zeiad Idris told IFN Fintech the outfit’s support for Shoal is not strictly set to deliver a publicly Shariah banking solution, even though underlying Islamic principles are still being applied.

“The tools used for Algbra’s banking solution and Shoal’s ethical approach make a very good match for each other, so there’s no conflict.”

Being a B-Corp certified fintech authorized by the UK Financial Conduct Authority as an electronic money institution, Zeiad said Algbra is able to provide Shoal its turnkey digital banking solution without a need for external or third party modules.

Joan Medland and Tom Mason, the co-founders of Shoal, explained that sustainability should be for everybody, not just for specialists or for the wealthy — by offering a savings pot that can start from GBP1 (US$1.25).

“The Shoal structure allows us to provide our clients with access to sustainable finance products not generally available to retail customers.” Joan and Tom said Shoal also provides transparency on what users’ money is used to support, in a way that helps to democratize sustainable savings.

“With Shoal’s unique Impact Calculator, they’ll also see how much carbon their savings will help avoid and how much clean water their savings will help generate while they are on deposit.”

Algbra has become the sole banking support for Shoal, which will initially focus on the UK market — with plans to expand to other geographies in due course. It takes over from Starling Bank and Solaris Contis Financial Services, which were instrumental in getting Shoal from its 2022 launch to where it is today.

Airo Malaysia seeing “promising initial performance” from Islamic portfolio

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Artificial Intelligence and Machine Learning Concept. Neural networks and another modern technologies concepts. Robot finger, robo advisor, Big data, robotic future technology and business concept. Technology sci-fi concept, hi tech.

Robo-advisory platform Airo Malaysia recently launched its Shariah compliant portfolio to fulfil the increasing demand for investments aligned with Islamic principles.

Airo has three Islamic portfolios: conservative, balanced and growth. CP Global Fintech Solutions, the company behind Airo, has engaged Tawafuq Consultancy as its sole Shariah adviser.

Airo’s Halal portfolios include global Shariah compliant stocks, Sukuk, exchange-traded funds, global Shariah compliant exchange traded commodities, and Islamic mutual funds.

“Since the Shariah portfolios were incepted (soft-launched) in November last year, they have shown promising initial performance, underscoring the effectiveness of our Shariah compliant investment strategy. Direct comparison with our conventional portfolios is challenging due to fundamental differences in investment strategies,” Sho Toh Yih Jang, CEO of Airo, tells IFN Fintech.

He observes that while Airo’s Shariah portfolios are structured around a long-only investment approach, its conventional portfolios employ a more complex strategy that includes leveraging long and short positions.

“Our commitment to launching the Islamic portfolio stems from recognizing the growing interest in ethical and responsible investing, which aligns closely with the principles of Shariah compliant investments. These portfolios not only adhere to Islamic financial principles, excluding investments in businesses involved with interest, uncertainty, gambling, and other prohibited activities, but also embody a broader appeal for ethical investment,” says Sho.

Moreover, the uniqueness of Airo’s Shariah portfolios lies in their global investment focus, powered by its proprietary investment strategy. This approach fills a gap in the robo-advisory space for Shariah compliant investments while providing steady financial returns, he says.

“Our Islamic portfolios represent a strategic extension of Airo’s offerings, to meet the needs of a diverse investor base looking for niche, ethical investment solutions in a digital-first format,” adds Sho.

As Airo’s Shariah compliant portfolios are still in the early stages of monitoring incoming investments, it might be premature to quantify this interest in precise financial terms.

“Nevertheless, we are cautiously optimistic about the performance of our Shariah compliant portfolios in the upcoming period. This is partly based on the anticipation of central banks reducing interest rates, which historically benefits equity markets. However, we recognize that interest rate cuts are among several factors influencing market performance,” adds Sho.

Airo’s investment strategy includes investing directly in shares listed on the US stock market. A main reason is that US shares are highly liquid, which reduces the risk of market manipulation.  

At present, Airo does not have immediate plans to expand its Islamic investment product offerings. It is focused on enhancing and perfecting its existing Shariah compliant portfolios to ensure they meet and even, exceed the investment goals and ethical expectations of their clients. For now, Airo will keenly monitor market developments and investor preferences closely, which may result in the potential introduction of new Islamic investment solutions in the future.

Multi-asset fundraising platform launches inaugural tokenized Islamic offering

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Kuala Lumpur, Malaysia - September 11, 2022: Kuala Lumpur city center in Malaysia and Petronas twin towers.

Kapital DX, touted as the first initial exchange offering platform in Malaysia, has launched its inaugural product: a tokenized primary offering of a Shariah compliant fixed income product issued by a local healthcare solutions company.

The offering by Integra Healthcare Technology, which is a program named i-INT Programme worth a total of RM150 million (US$31.55 million), carries a tenor of five years and a profit rate of up to 10% per annum.

Tranche 1 of the program, which amounts to RM29 million (US$6.1 million), has been fully subscribed through institutional participation, while Tranche 2 is currently open for subscriptions.

Integra, which specializes in developing and managing specialist rehabilitation and healthcare centers, is raising funds to set up four new rehabilitation centers.

Kapital DX’s platform helps private companies raise funds through the issuance of security tokens, enabling fractional ownership of various assets through blockchain technology and making private market investments accessible to a wider audience.

“This strategic move is designed to bridge the funding gap for growth to late-stage companies, facilitate project financing and expand the range of available asset classes through tokenization,” a press release read.

Registered and regulated by the Securities Commission Malaysia, Kapital DX, which officially launched in 2023, is one of only two initial exchange offering platforms licensed by the regulator. The other registered entity is equity crowdfunding platform pitchIN, which also runs a token crowdfunding platform.

In September 2023, Malaysia Debt Ventures, a subsidiary of the Minister of Finance (Incorporated), invested in Kapital DX, and announced plans to raise funds on the Kapital DX platform to establish the first venture debt fund listed on an initial exchange offering platform.

New York-based Shariah gold token lists on Green-X

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businessman holds in hands many gold coins on white background close up

A precious metals mining and blockchain development company has secured the greenlight to list its gold-backed Shariah compliant security token on Green-X, marking its expansion into the Asian and Middle Eastern markets.

The token, DIGau, is issued by Dignity Gold based in New York, and offers investors exposure to the US precious metals mining and mineral sectors. The token is backed by a minimum of US$6 billion in Dignity gold reserves and has been certified Shariah compliant by a scholar.

“We are excited to receive the pronouncement of Shariah compliance and Green-X listing. This is an important step in broadening the market for DIGau tokens especially in Asia and the Middle East,” shared David Weild IV, the chairman of Dignity Gold’s board.

The initial DIGau tokens were issued under exemption from the registration requirements of the Securities Act provided by Rule 506(c) of Regulation D and Regulation S under the Securities Act. They are “restricted securities” as defined in Rule 144 under the Securities Act.

DIGau was listed on CoinMarketCap last July and as at the 3rd April 2024 was trading at US$2.03.

The listing of this gold security token on Green-X, a Labuan-licensed Shariah compliant ESG digital asset exchange, confirms an earlier report by IFN, the sister publication of IFN Fintech. It expands Green-X growing portfolio of real-world asset (RWA) and security tokens. The exchange earlier listed Tai Shan Digital, which represents interest in Chinese antique ceramics from Tang to Qing Dynasty.

Philip Tam, the CEO of Green-X, confirmed that it is also working on tokenizing sapphire gemstones and rare earth elements. It is currently in talks with blockchain partners in Korea to bring RWAs to the decentralized finance space to unlock liquidity and trading possibilities.

SIDB secures license

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SAUDI ARABIA: Smart Interaction for Digital Brokerage (SIDB) has received a license from the Saudi Central Bank to offer finance aggregation services, according to a press release by Cykube, the developer of Qardi, SIDB’s SME portal.

Junaid Wahedna makes way for new CEO as he takes on chairmanship of Wahed

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Mohsin Siddiqui, Chief Operating Officer, Wahed

Wahed has appointed Mohsin Siddiqui to succeed Junaid Wahedna, the founder of Wahed, as the company’s CEO.

Mohsin joined Wahed last year as COO from a UK-based regtech firm where he served as chief revenue officer. Mohsin began his career at New York-based online trading platform, OANDA.

Junaid, who founded Wahed in 2017, is taking on a new role as chairman of the digital investment management platform.

“More important than his decorated CV, Mohsin has a deep and personal connection with our mission and values and a clear understanding of why over 350,000 clients choose to invest with Wahed. In less than a year as COO, he has made an immediate impact on the business and I have complete confidence that he is the right person to continue to drive Wahed’s growth,” said Junaid.

Malaysian Islamic fintech aspirant partners with Ant International to boost sustainable finance for MSMEs

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Capital A, formerly known as AirAsia Group, has collaborated with Ant International through its digital arm to explore synergies in digital payments and MSME fintech solutions.

The partnership will see MOVE Digital – comprising AirAsia MOVE (formerly known as airasia Superapp) and BigPay – explore integrating payment methods and providing acquiring services to Capital A’s platforms as well as work on digital marketing and sponsorship opportunities in addition to improving access to sustainable finance while transitioning to a low-carbon economy for MSMEs.

“[Ant International’s] global recognition as a financial technology powerhouse, coupled with their unparalleled expertise, is poised to propel rapid growth for our fintech venture BigPay and our online travel app AirAsia Move,” said Tony Fernandes, CEO of Capital A. “Both entities are dedicated to agile expansion, and this partnership promises to accelerate our collective mission of providing seamless financial services and affordable travel experiences to our customers worldwide.”

Pay it forward

More specifically AirAsia MOVE will work on integrating Alipay+ payment solutions on its platform as well as explore the use of wallet technologies, including super apps and mini programs within the Alipay+ ecosystem.

In addition, BigPay will become Alipay+ partner wallet, allowing its 1.5 million users another option to pay when traveling. BigPay will also consider using the Chinese tech giant’s wallet tech, including fraud prevention.

BigPay continues to express intentions to become Shariah compliant or at least, offer Shariah compliant financing solutions.

Sustainable finance

Together, Capital A and Ant International have committed to promote sustainability initiatives including enhancing global digital inclusion, cultivating digital talent and promoting sustainable travel programs. Capital A will be joining Ant International’s SIRIUS initiative, which seeks to provide MSMEs with access to sustainable finance.

“Ant International is dedicated to building a vibrant, sustainable future digital economy with our business partners across the world on the back of our technology strength and cross-sector insights, and I believe our comprehensive partnership with Capital A will achieve greater inclusive impact for the entire society beyond business successes,” said Yang Peng, CEO of And International.

Fasset to use UAE as springboard to wider region as app goes live

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Digital asset exchange Fasset has finally launched its app in the UAE five months after it secured Dubai’s first Virtual Asset Service Provider (VASP) license.

The release of the app in the UAE follows its launch in Indonesia last year.

With the VASP license, granted by the Virtual Asset Regulatory Authority, Fasset is permitted to carry out virtual asset brokerage services out of Dubai for retail and institutional customers globally. Its platform facilitates the buying, selling and swapping of digital and tokenized real-world assets in the user’s preferred currencies including cryptocurrencies, stablecoins as well as bundles.

“UAE is experiencing a surge in digital asset investment as the government promotes innovation and entrepreneurship in the country,” observed Fasset CEO Mohammad Raafi Hossain. “Our goal is to empower people to have universal access to financial services, so they have more opportunities to build and manage their wealth.”

Backed by Liberty City Ventures, Fasset – which has raised US$26.7 million in funding – intends to offer other asset classes including tokenized real estate and Sukuk. It is understood that the platform has ambitions to expand its service offerings to include financing and remittance.

Fasset last year established a Shariah spin-off, Fasset Islamic, a Halal investing app offering exposure to Halal digital assets and real-world assets such as gold. It intends to include Halal staking and Shariah compliant stocks into its portfolio.

Regional expansion and beyond

Fasset now has a firm foothold in the UAE and Indonesia and plans to use these two markets as gateways into the respective regions.

So far, the Indonesian operation seems to be on a positive trajectory. In the first week of its launch in the world’s most populous Muslim country, the app generated a waitlist of over a million. It has also partnered with telco provider Indosat Ooredoo Hutchison to launch an embedded digital asset exchange in its app, making it available to over 100 million users in Indonesia. Fasset has also collaborated with Mastercard to offer a crypto card in the Southeast Asian nation.