The International Finance Corporation (IFC) has proposed up to $7 million in equity investment in Carabao Capital Global, a fintech startup that operates in the Philippines as First Circle.
In a disclosure on its website, IFC said the proposed investment will help the fintech startup further provide unsecured credit lines to SMEs in the Philippines.
The credit lines will have competitive rates, flexible repayment options, and the convenience of fast digital operations.
IFC also disclosed that the proposed investment is part of a fundraising round to enable First Circle to scale its business. The international lender is leading the said investment round.
First Circle, launched in 2016, harnesses new and alternative data points to provide supply chain and trade financing to SMEs in the country, most of whom have no prior credit history.
The startup also cuts the average loan approval time to 5 hours regardless of prior credit history as it focuses on supply chain and trade financing.
First Circle’s current shareholders include the company’s management team, Fasanara Capital, Venturra, Insignia Ventures, Accion, and other Filipino and international investors.
The IFC considers its proposed investment as crucial in the Philippines, a country with one of the lowest SME credit penetrations in Southeast Asia.
“IFC anticipates that the project will lead to increased access to finance for MSME stakeholders by financing the growth of First Circle’s operations and loan book, as the company specifically provides loans and banking solutions for MSME clients with a majority of its clients being small and medium enterprises,” IFC said in its disclosure.
Additionally, IFC said it expects the proposed investment to promote systemic changes in the MSME finance market in the Philippines.
By providing loans to the underserved MSME market at scale, First Circle will demonstrate the viability of lending to these smaller clients to a broader market, opening up the MSME lending market to other players,” it added.
On its website, First Circle said it has already transformed access for over 3,000 SMEs in the Philippines, powering the growth of its customers’ businesses by an average of 80% after two years.
First Circle raised $26 million in its Series A funding round in 2018, anchored by Indonesia-based venture capital firm Venturra, in what was the biggest fundraising for a fintech startup in the Philippines that year.