Kenanga Capital Islamic, a unit of Kenanga Investment Bank (KIBB), has invested 30 million Malaysian ringgit ($7 million) in peer-to-peer firm CapBay as part of its efforts to address the gap in the market for sharia-compliant financing, according to a company statement on Monday.
The investment is intended to grow CapBay’s sharia-compliant supply chain finance arm CapBay Islamic, which is approved for sharia-compliant P2P financing by the Securities Commission Malaysia.
“The injection of funds will help accelerate the growth of Malaysian SMEs and with the launch of our Islamic receivables and working capital financing solutions, we believe that this will add another dimension to our efforts in supporting the SMEs in the country,” Mohd Mokhtar Mohd Shariff, chairman at CapBay, said in a statement.
Last year, CapBay acquired a 49% stake of Kenanga Capital Islamic to form a joint venture, creating Malaysia’s first Islamic supply chain finance fintech.
“We have been collaborating with CapBay to develop an Islamic fintech to serve a wide range of SMEs through a digital platform that enables a faster and more convenient process,” Chay Wai Leong, group managing director at KIBB said.
The coronavirus pandemic has taken its toll on Malaysian businesses, particularly small and medium-sized enterprises, whose access to quick and affordable financing to bridge the cash-flow gap is limited.
With the funding from Kenanga Group, CapBay seeks to ramp up its investments in small businesses.
CapBay Group has financed more than 14,000 transactions worth over 1.4 billion Malaysian ringgit while serving over 800 SMEs since 2017. Its P2P investors earned net returns as high as 10% per year.
Across Southeast Asia, several other P2P players have gained supports from institutional lenders and venture capitals in the past couple of months. Investree, an Indonesian P2P lender, received $10 million from Swiss asset manager responsAbility and longtime partner Accial Capital in October.
Another Indonesian P2P lender CROWDE, which focuses on agriculture, closed a $9 million Series B funding led by Singapore’s Monk’s Hill Ventures in October, a month after concluding a $7 million Series A round led by the same VC.