Finance and leasing company FlexiGroup is taking a $2 million equity stake in Kikka Capital, a fintech lending online to the highly competitive small business market.
Kikka provides an unsecured revolving line of credit of up to $100,000 based on a system which assesses the cash flow of small businesses in real-time. Based on this proprietary technology, Kikka can approve a loan online in 7 minutes.
The credit model is based on Kabbage in the US which has lent more than $US1.6 billion to 100,000 businesses.
FlexiGroup will get a “minority interest” for its $2 million investment and provision of a funding line but the percentage hasn’t been disclosed.
The deal also comes with an option to increase its investment in the future and an option to appoint a director to the Kikka Capital board.
A short time ago, FlexiGroup shares were up 1.3% to $2.23.
Symon Brewis-Weston, who started as FlexiGroup CEO in February, says the partnership allows his company to improve risk pricing by combining leading credit decision processes with Kikka’s real-time and daily cash flow assessment.
“We are in the unique position to be able to benchmark this, and other, credit models with our own established ones and create best-of-breed models using the latest technology,” he says
Kikka founder David Brennan says the company can now, with FlexiGroup’s support, rapidly scale up the business to become a major player in the disruptive online business lending market.
“The Australian SME lending market is becoming more competitive as new and innovative providers such as Kikka being to fill the gap being left by banks and other mainstream lenders,” he says.
“We believe that the deal with FlexiGroup also validates our business model and systems. We are clearly doing something right, but working alongside FlexGroup will allow us to further refine our offering, drawing from their vast experience in the lending and SME lending space.”
FlexiGroup in March completed the purchase of New Zealand’s Fisher & Paykel Finance, a provider of in-store credit cards, for $275 million.
In the latest half year results, the company posted a 4% increase in cash profit to $44.3 million and is heading for a full year result of $92 million to $94 million.