Funding Societies obtains investment from Khazanah, CGC Digital

FUNDING Societies obtained an undisclosed amount of strategic investment from Malaysia sovereign wealth fund Khazanah Nasional and CGC Digital, the digital arm of Credit Guarantee Corporation.

It plans to use the funds to expands its coverage in Malaysia to areas beyond Kuala Lumpur, Selangor, Penang and Johor, the company said on Wednesday (Jan 3).

The finance platform, launched in 2015, offers financing to micro, small and medium enterprises (MSMEs) across Singapore, Malaysia, Indonesia, Thailand and Vietnam.

It said it has disbursed over US$3.5 billion in business financing, and aims to address the US$19 billion funding gap for MSMEs in Malaysia, where it is registered as a recognised market operator.

Funding Societies also plans to widen the reach of its Islamic financing solutions. Since its launch in May 2023, the platform has disbursed over RM100 million (S$28.8 million) in Shariah-compliant financing in Malaysia.

Khazanah’s investment falls under its Dana Impak mandate. The fund, which has been allocated RM6 billion over five years, invests in areas that raise Malaysia’s economic competitiveness, build national resilience and provide socio-economic benefits and impact to the rakyat (community).

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Khazanah managing director, Amirul Feisal Wan Zahir, said: “Being the backbone of Malaysia’s economy and contributing nearly half of the nation’s employment, MSMEs are both critical and critically underserved.”

With Dana Impak’s investment, Funding Societies is targeting to have more than half of its annual loan disbursements come from Shariah-compliant financing by 2025, in a bid to support the growth of Bumiputera MSMEs.

The investment from CGC Digital, meanwhile, follows a prior partnership between the fintech and Funding Societies on a new guarantee product developed via a pilot programme.

Yushida Husin, chief executive of CGC Digital, said:“CGC Digital seeks to push the envelope by developing a suite of innovative digital guarantee products for thin-file MSMEs that can be offered together with Funding Societies’ financing products to increase their chance of obtaining much-needed financing.”

Funding Societies group chief executive and co-founder Kelvin Teo noted that MSMEs represent 97 per cent of business establishments in Malaysia and contribute 38 per cent to gross domestic product. However, this group still faces significant challenges when obtaining credit.