Tuesday, June 18, 2024
Editor's PickInvestree’s Shariah business still up in the air despite remaining bullish on...

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

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.

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