Home Credit’s Asia business sale hints at what lies ahead for BNPL

Home Credit sold its Indonesia and Philippine units to Japanese and Thai banks in November. India and Vietnam remain part of the group. It was not a grand exit for the consumer-lending firm, but a path likely to be followed by peers

Consumer lending businesses have had a tough time in the pandemic and are facing more challenges in an economic downturn

Home Credit is no different. Its parent PPF has been consolidating to focus on core markets and more stable sectors

The sale was long anticipated, but the price tag, which was revealed now, reflects waning investor confidence in the segment

Of Home Credit’s peers, those who haven’t already acquired a banking licence of their own will be looking for similar exits

Home Credit is the lending unit of Czech Republic’s biggest investment group, PFF, and it has borrowers across nine countries in central and eastern Europe, Russia, Kazakhstan, China, South and Southeast Asia.

It’s the ‘OG’ buy-now-pay-later (BNPL) company that pioneered short-term credit, long before it became fashionable.

But, the model is facing a reckoning. The company was under pressure to sell and its global footprint is acting against it. PPF divested from its Russia businesses following the Ukraine conflict. Meanwhile, China’s crackdown on the technology sector made operating “impossible” in the country.

And now, it’s also exiting some of its major Southeast Asian markets. Japan’s largest lender Mitsubishi UFJ Financial Group affiliates and Krungsri Bank, a leading Thai institution, bought 100% of shares in Home Credit Philippines and 85% shares in Home Credit Indonesia. All for US$650 million.

Only India and Vietnam were spared. And not because HomeCredit wanted to keep them close, but banks don’t particularly view them as attractive. In India, the company’s loan book has only been shrinking, while Vietnam is filled with regulatory hurdles.

So what can banks do with BNPL firms that Home Credit could not manage to do by itself? Nadine has the story today.

The global turmoil facing buy-now-pay-later (BNPL) models is set to reach Asian shores as well. But one non-bank lender’s stress can be another bank’s opportunity.

In a recently released financial report, global consumer-finance conglomerate PPF Group confirmed that a part of Home Credit—its lending-business units in Indonesia and the Philippines—has been acquired.

Czech Republic’s biggest investment group, PPF, has sold all its shares in Home Credit Philippines, and 85% of its shares in Home Credit Indonesia to a consortium of Japanese bank Mitsubishi UFJ Financial Group (MUFG) affiliates and leading Thai institution Krungsri Bank.

Pending regulatory approval, the transactions valued at ~€615 million (~US$650 million) are expected to close by the second half of 2023.

The deal was a long time coming. Home Credit, which set up shop more than a decade ago, has been vocal vocal Intellinews PPF group confirms plans to sell Chinese operations Read more about its intentions to exit Asian markets since the beginning of this year. But the fact that Japan’s largest lender, MUFG, was lining up as a buyer for some Southeast Asian markets was first reported reported Bloomberg MUFG in Talks to Buy Two Home Credit Lending Units in Southeast Asia, Sources Say Read more in August.

AUTHOR

Nadine Freischlad

Nadine is based in Indonesia. She covers Southeast Asia's super apps, the changing nature of work and employment, and other structural shifts happening as a result of digital disruption.

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