By Andrei Skvarsky.
Two financial services firms are launching a $200m fund to provide loans to Russian fintech companies in a bid to help a sector starved of financing because of legal constraints.
The FinTech Credit Fund, a joint project by investment managers FinTech Capital and Da Vinci Capital, will offer debt financing to fintechs that specialise in lending to individuals and small and midsize enterprises, according to East-West Digital News (EWDN).
Borrowers from FinTech Credit Fund would use some of the money to finance their own loans and the rest to meet their corporate needs.
FinTech Credit Fund loans would have a maturity of between six months and three years.
Russian banking news website Banki.ru cited FinTech Credit Fund chief executive Yury Popov, who is managing partner of FinTech Capital, as complaining that Russian fintechs have extremely limited sources of financing and that this holds back the country’s fintech sector.
Capital markets are only open to large companies, setting up a credit line with a bank makes little sense because of a bureaucratic rigmarole it involves and high subsequent monitoring charges by the lender bank, and only banks are allowed to open state-insured deposit accounts for individuals, Popov explained.
ID Finance, FinTech Capital’s parent company, said in a statement that, in processing a loan application, FinTech Credit Fund would look at the applicant’s creditworthiness, business model, technology, loan portfolio quality, and risk and revenue potential.
A short while before the emergence of FinTech Credit Fund became known, Russian billionaire Oleg Boyko announced a plan to invest $150m in fintech startups over the next five years, according to EWDN.
FinTech Capital is an asset manager owned by ID Finance, a Barcelona-headquartered fintech company with Russian roots. Da Vinci Capital is an investment manager that is domiciled in Guernsey and also has offices in Moscow and Hong Kong.