FinAccel’s SPAC merger plan, US IPO canceled

Singapore-based FinAccel, the parent company of Southeast Asia buy-it-now-pay-later (BNPL) platform Kredivo, has for the time being canceled its proposed merger with an acquisition company in Special Purpose (SPAC) and launch an initial public offering in the United States, citing unfavorable market conditions.

In August last year, FinAccel announced plans to merge with VPC Impact Acquisition Holdings II, a SPAC sponsored by Chicago-based investment firm Victory Park Capital (VPC), and proceed with the IPO. in the first quarter of 2022. The plan assigned a pro forma value for FinAccel of $2.5 billion.

Although the merger is not taking place at this time, FinAccel and VPC are deepening their ties. Akshay Garg, co-founder and CEO of FinAccel, said Forbes Asia that VPC had conducted a $145 million private structured investment round in Kredivo, alongside the termination of the SPAC agreement. In addition, Kredivo would consider offering other investors who held positions in the SPAC company and those who had previously committed to PIPE to invest in the company. VPC has been investing in Kredivo since 2020. An initial credit facility of $100 million, concluded in July 2020, was increased to $200 million in June 2021.

“While adverse market conditions have halted our short-term IPO plans via the proposed business combination with VPCB, we are excited to deepen our relationship with VPC and other high profile investors. quality through a new round of private funding,” Garg said in a statement.

SPAC said it was considering future options, including seeking an alternative business combination. However, if SPAC is liquidated, Kredivo will issue a penny warrant, allowing VPC to acquire 3.5% of Kredivo’s shares.

Garg said it was the first time in the SPAC universe that a sponsor doubled down on the company while doing a mutual termination. “It demonstrates the sponsor’s optimism about our business.”

Gordon Watson, partner at VPC, said adverse public market conditions and process delays “outside of our and Kredivo’s control affected our transaction timing and made it impossible to close the transaction under the terms of the agreement. business combination agreement. Nonetheless, we continue to believe in the huge market opportunity for digital consumer credit and banking services in Southeast Asia, and our continued investment in Kredivo reflects our view that the company is well positioned to deliver innovative products and capture long-term market share.

At the end of last year, FinAccel claimed to have four million users in Indonesia for its Kredivo platform. Last August, Kredivo partnered with Vietnam’s VietCredit to launch its service there. Garg said despite the cancellation of the IPO, there was no change in the company’s direction and expansion plans.