CapBay and Kenanga to form Malaysia’s first Islamic supply chain finance fintech

With its acquisition of a 49% stake in Kenanga Capital Islamic Sdn Bhd (KCI), Malaysian fintech startup CapBay is forming a joint venture with KCI’s parent company Kenanga Investment Bank Berhad (KIBB) to create Malaysia’s first Islamic supply chain finance fintech, according to a statement.

The joint venture aims to “continue the effort of growing Shariah-compliant [businesses] and developing the Islamic finance market.”

Following the acquisition, CapBay co-founder Xing Xian Ang will serve as KCI’s CEO. He will report to Datuk Chay Wai Leong, the group managing director at KIBB. Meanwhile, Dato’ Sri Mohd Mokhtar Mohd Shariff has been appointed as chairman of CapBay.

CapBay co-founder Xing Xian Ang / Photo credit: CapBay

The new fintech firm’s aim is to help small and medium-sized enterprises (SMEs), contractors, and vendors obtain financing in order to supply goods and/or services to large corporations, the government, and government-linked companies (GLCs). In this way, SMEs can leverage the larger corporations’ credit-worthiness while the latter are able to support their vendors in turn.

Founded in 2016, CapBay is a multi-bank supply chain finance and peer-to-peer financing (P2P) platform. Using its payment risk scoring model, it predicts the risk of each transaction by conducting an analysis of financial statements. It also uses machine learning to assess data points such as its clients’ historical relationships, payments, quality of contracts, and other patterns.

CapBay claims that its approach has allowed the company to “keep the default rate low” while providing financing for more unbanked and underbanked customers.

“We have always been committed to offering our customers the solutions they need to advance the growth of Malaysian businesses of all sizes. I am confident that this partnership with KIBB will allow us to grow as an organization and better serve our customers as we invest in our infrastructure and service offering,” said Ang in a statement.

CapBay claims that since 2017, it has financed more than 9,000 transactions amounting to more than 800 million ringgit (US$192.6 million) and has served over 500 SMEs.

Formerly known as CapitalBay, the company raised US$477,000 in a seed round led by KK Fund in 2017.

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.15 ringgit.