CapBay, a Malaysian multi-bank supply chain finance and peer-to-peer financing (P2P) platform, has secured MYR30 million ($7.1 million) investment from Kenanga Capital Islamic Sdn Bhd (KCI), a subsidiary of Kenanga Investment Bank Berhad (KIBB).

CapBay said in a statement on Monday that the investment is a step forward to growing CapBay’s Shariah-compliant Supply Chain Finance arm, CapBay Islamic, which is approved for Shariah-compliant P2P financing by the Securities Commission Malaysia (SC).

“CapBay is thrilled to receive the support from Kenanga and for sharing the same spirit of helping small and medium enterprises (SMEs) thrive especially during this time. The injection of funds will help to accelerate the growth of Malaysian SMEs and with the launch of our Islamic receivables and working capital financing solutions, we believe that this will add another dimension to our efforts in supporting the SMEs in the country”,” said Mohd Mokhtar Mohd Shariff, Chairman of CapBay.

Meanwhile, KIBB Managing Director Chay Wai Leong said:“ CapBay has been a great partner and with this investment, we hope that we can bring a positive impact to the SME community in Malaysia. We have been collaborating with CapBay to develop an Islamic fintech to serve a wide range of SMEs through a digital platform that enables a faster and more convenient process.”

Last year, CapBay formed a partnership with KIBB through the acquisition of a 49 percent stake in its subsidiary, KCI to form Malaysia’s first Islamic supply chain finance fintech.

Leveraging on CapBay’s strong technological expertise, SMEs can now obtain flexible and cost-effective financing seamlessly through a digital platform.

Through the innovation of the Malaysian fintech, KCI can also benefit from predicting risk in each transaction that goes beyond just financial statement analysis but utilises machine learning to assess thousands of data points such as historical relationships, payments, contract quality and other patterns. This data-driven approach helps to invigorate the Islamic supply chain finance solution for the underbanked.

As the SME financing market continues to grow rapidly, CapBay said the demand for a Shariah-compliant option has increased. According to the Association of Islamic Banking and Financial Institutions Malaysia, it predicted that half of Malaysia’s banking assets to be Islamic by 2030 as the industry’s growth outpaces conventional banking.

“The adoption rate of Islamic financing in Malaysia is growing – this is a clear reflection of the demand for Shariah-compliant products in the country. We noticed many of our clients seeking an Islamic alternative to our products and we are catering to this growing demand,” said Mohd Mokhtar.

With this latest initiative, CapBay said its P2P investors can now expand and diversify their investment portfolio by investing into Islamic financing notes. These notes are predominantly backed by government and Government-Linked Companies (GLC) receivables.

It said CapBay differentiates itself by offering lower risk investment notes in a bid to enhance investor trust and confidence especially during these times of uncertainty. They recently launched a guaranteed investment programme which is Malaysia’s first guaranteed P2P investment backed by a reserve fund. Its P2P platform has maintained 0% default since its launch in March 2020.

CapBay is a financing platform that helps SMEs grow and unlock cashflow trapped in their supply chain by providing financing solutions. Through its proprietary credit-decisioning model, businesses of all sizes can obtain financing while banks and investors can participate in high-quality financing deals.

Since 2017, CapBay has financed more than 14,000 transactions worth over MYR1.4 billion ($330 million), serving over 800 SMEs. Its P2P investors have earned net returns of 10 percent per annum, with 0% financing loss. It has partnered several large corporates, banks and institutional investors to offer its solution.

Established for more than 45 years, KIBB is a financial group in Malaysia with extensive experience in equity broking, investment banking, treasury, Islamic banking, listed derivatives, investment management, wealth management, structured lending and trade financing.

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