Stepping foot into the Islamic finance industry for the first time, CapBay has partnered with Kenanga Capital Islamic to set up a financing platform for underserved SMEs.
CapBay, a Malaysian peer-to-peer (P2P) financing platform, has forayed into the Islamic finance industry with the acquisition of a 49% stake in Kenanga Capital Islamic (KIC), a subsidiary of Kenanga Investment Bank (KIBB), thus forming a joint venture with KIBB to establish an Islamic supply chain finance fintech platform.
“Over the past few years, we have had about 70% Muslim vendors seeking Shariah compliant financing solutions and I think that CapBay would be able to serve them better if we can offer them that,” Ang Xin Xian, the co-founder of CapBay, tells IFN.
Targeting underserved SMEs, the Islamic platform, which will be launched in the first quarter of 2021, leverages on CapBay’s infrastructure in a bid to enable SMEs to obtain financing seamlessly via a digital platform. Through this, SMEs will avail themselves of various working capital financings structured under the Shariah guidelines supervised by a Shariah advisor.
“KIC mostly focuses on providing factoring financing so this is where CapBay introduced working capital financing that supports SMEs end to end. Meanwhile, being a subsidiary of a bank, KIC has a much larger balance sheet which means that it is able to provide significant financing to our clients, especially to those that are looking for higher financing solutions,” Ang explains.
CapBay, inspired by MarketInvoice, a UK-based business finance lender, was launched in 2016 with a vision to provide short-term financing to businesses of all sizes.
“CapBay is regulated by the Securities Commission Malaysia as a P2P financing platform and also as a multibank supply chain finance platform. The Islamic supply chain finance fintech platform will also be regulated under CapBay’s existing regulations,” Ang says.
Despite facing several hurdles when setting up, CapBay has established itself in the market and has also built up a very strong track record. The financing platform currently offers total contract financing solutions, general working capital and short-term working capital, among others.
Looking ahead, CapBay is targeting approximately 5,000 financing customers over the next year and a half.
“CapBay has traditionally not been very focused on term loans and we are looking to work on that. I would say that moving forward we will be working toward becoming a platform that will offer primarily Shariah compliant financing,” adds Ang.