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Miguel Cordon · · 5 min readWill Grab’s bid for Home Credit bolster its fintech ambitions?
Southeast Asian super app Grab expects 2022 to be “another watershed year” as it gears up for its digibank launch in Singapore, its CEO Anthony Tan recently said when announcing the firm’s fourth quarter and full-year 2021 results. In fact, it’s becoming clearer that this year will see Grab double down its focus on financial services.
Earlier this year, it acquired a 16.3% stake in Indonesia’s PT Bank Fama International for US$35 million. Now, the company is looking to acquire the Southeast Asian assets of Home Credit.
On paper, the acquisition makes sense: Home Credit is a consumer finance provider which targets those with little or no credit history. It would provide a substantial boost – mainly in products and users – to Grab’s still unprofitable financial arm.
But it’s also far from being a done deal. In particular, several big Japanese banks are also eyeing Home Credit’s assets in Southeast Asia. Some also question whether this is the right time to acquire an unsecured credit business, which depends on demand for consumer durable goods.
Grab declined to comment for this story.
Acquisition a “big positive”
Founded in the Czech Republic in 1997, Home Credit offers point-of-sale (POS) loans, cash loans, and revolving loan products through its online and physical distribution networks.
The company, now headquartered in the Netherlands, focuses on emerging markets from Central and Eastern Europe to China – Grab is interested in its Indonesian, Philippine, and Vietnamese operations.
Image credit: Timmy Loen
Angus Mackintosh, founder and equity analyst at CrossASEAN Research, tells Tech in Asia that he views the move as a “big positive.” This is because of Home Credit’s early entry into both online and offline consumer finance, as well as its presence in the rapidly rising buy now, pay later (BNPL) space.
See Also: Why the time is ripe for ‘buy now, pay later’ in Asia
“We have seen a few potential catalysts, such as the recent acquisition of Bank Fama, but [the Home Credit acquisition] would have an immediate positive financial impact as well as extend Grab’s reach in financial services,” he adds. “I would say it should present a positive catalyst once confirmed.”
How much might this “positive financial impact” be?
Grab’s financial services business saw an International Financial Reporting Standards (IFRS) revenue of negative US$1 million in Q4 2021 (though this is an improvement compared to the same period in 2020, when it clocked in at negative US$4 million).
However, these IFRS figures also account for incentives paid to merchant partners and consumers. If we take incentives out, revenue would have been US$30 million in Q4 2021, up from US$19 million in Q4 2020.
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Acquiring Home Credit’s SEA business will provide Grab access to 24 million customers in the region, but a trio of Japanese banks stand in the way.
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