Fintech Validus acquires Citi's small-business banking unit loan portfolio

FINTECH Validus announced on Tuesday (Mar 22) that it has entered into an agreement with Citi Singapore to acquire its CitiBusiness loan portfolio, a unit that serves small businesses under its consumer banking franchise.

In a statement, Validus noted that this is the first time a South-east Asian fintech has acquired an established bank's loan portfolio and customer base. The deal value was undisclosed.

The development follows Citi's announcement of the closure of its CitiBusiness unit last August. The bank re-allocated the resources and people from the unit to support other growth areas and to sharpen its client focus.

Validus noted that this acquisition is expected to bolster the company's top line revenue and customer base, and expand its growing loan book.

Co-founder and executive chairman of Validus Vikas Nahata said: "[The loan portfolio] is a complementary fit for our existing business, and will enable us to rapidly expand our customer base and loan book."

He said Citi customers who will be transferred to Validus can benefit as they are able to access additional financing solutions and services to grow and manage their businesses.

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In the rising interest rate environment, Validus sees a favourable impact on its business as its lending rates have always been higher than those of banks, the company told The Business Times. It predicts that its offering will converge with those of banks and traditional lenders.

Founded in 2015, Validus is a financing platform in South-east Asia, focused on small and medium-sized enterprises (SMEs). The company is headquartered in Singapore, but has expanded to Indonesia, Thailand and Vietnam.

To date, the company has disbursed over US$1 billion in loans to small businesses in Singapore, Vietnam, Indonesia and Thailand; it plans to double the amount in the next year.

Prior to this agreement with Citi, Validus acquired KlearCard, a business payments and expense-management technology platform. The fintech has also expanded its team in South-east Asia over the past 6 months to support its new technology and neobank initiatives.