Singapura Finance, fintech MatchMove believed to have teamed up for digibank bid

Singapore

FINANCE company Singapura Finance and homegrown digital payments startup MatchMove Pay are believed to have joined forces in hopes of landing a digital bank licence in Singapore.

Sources tell The Business Times (BT) that their bid is among the 21 digital banking contenders here, and that it is likely that they will be gunning for a full-bank licence that will allow them to collect deposits from retail customers. It is still unclear if there are more members in the consortium.

The digital full-bank licence - there are two available - comes with an eventual capital requirement of S$1.5 billion, and will require the entities to be Singaporean-controlled.

On the other hand, the three digital wholesale bank licences up for grabs will allow successful applicants to serve SMEs and other non-retail segments. There is a capital requirement of S$100 million, and foreign entities can take a majority stake.

Both Singapura Finance and MatchMove have declined to comment.

Singapura Finance, the smallest of the three listed finance companies in the Republic, has a minority stake of about 1.6 per cent in MatchMove which it paid US$5 million for, according to a Singapore Exchange filing in October 2019. The finance company arrived at a US$295 million pre-money valuation of MatchMove based on the startup's current and future sales pipeline.

Singapura Finance had said that this was part of its "strategic positioning into the financial technology era" as the move represented "an opportunity for the group to acquire a stake in a business that has possible long-term growth potential".

In the filing, it was stated that MatchMove recorded a net loss of about S$20.4 million for the financial year ended 31 Dec 2017, based on the latest available audited financial statements then.

Headquartered in Singapore with offices in India, Indonesia, Vietnam and the Philippines, MatchMove operates a digital wallet that allows businesses to make online and offline payments via prepaid cards issued instantly.

In September last year, MatchMove's founder and group chief executive Shailesh Naik said that it acquired a stake of up to 20 per cent in Singapore peer-to-peer lending platform MoolahSense to boost its SME lending capabilities in the region, with plans to raise that to a majority stake over the next 12 months.

As for Singapura Finance, its latest third-quarter results for 2019 showed that profit after tax fell 42.7 per cent to S$1.88 million from a year ago due to lower writebacks for impairment losses on loans and advances.

The group's total loans net of allowances increased by 7.4 per cent to S$730.5 million as at Sept 30, 2019 compared to 31 Dec 2018, but total deposits decreased by 8 per cent to S$668.7 million for the same period.

The finance company's market capitalisation stands at about S$141 million, compared to its peers Sing Investments & Finance at S$224 million and Hong Leong Finance at S$1.2 billion.

Hong Leong is another finance company that was said to be considering a digital banking bid, but it has since issued a statement to say that it did not submit an application.

Sing Investments & Finance has also confirmed with BT that it did not apply for a digital banking licence.

The Monetary Authority of Singapore earlier said that it has received a total of 21 digital bank applications - 14 of them wholesale, and seven for the full-bank licence. Of the total, fewer than half have been made public.

Results are likely to be released by mid-2020 and the new digital banks are expected to start operations by the middle of 2021.

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