Senjo Group in Singapore is looking to invest in business-to-business lending companies, including fintechs, in Asia, says Gavin Lock, COO.
He has taken charge of the group’s effort to invest in mature payments businesses in Asia, including in gaming, as well as in retail and hospitality. (Sam Evans, who had been charged by Senjo Group to make acquisitions, left Singapore for his native U.K. last year for family reasons, Lock says.)
Although the lending investment strategy is still speculative, “SMEs are underserved by banks,” Lock said. “How do we leverage a lending platform in the area of payments?”
One example of the kind of business Senjo could be interested in would be merchant settlement factoring.
Between payment gateways and lenders, Senjo appears to be aiming to muscle in on the acquirer side of the payments industry.
When asked to compare the vision to what an acquirer vendor such as First Data or Fiserv does, Lock said Senjo’s goal was to find a niche in Asia. “The First Datas have scale operations in Asia, so we’d look to partner with companies like that, or be a payments facilitator to them,” he told DigFin. “But maybe we could grow enough to become an acquirer ourselves.”
(How it works: in a traditional payments cycle, a merchant such as a gaming, retail or hotel business, would send customer transaction data to its financial institution, usually a bank or a payments gateway, called an acquirer. The acquirer might use a credit-card company to authorize the transaction vis-à-vis the customer’s own financial institution, i.e. the issuer; the acquirer and issuer will then use a settlement bank to finalize the trade. Acquirers are often banks, but can also be data vendors, and increasingly tech companies such as Stripe, PayPal or WePay can sit between merchants and the acquirer as payment gateways. Most of the fees continue to be captured by issuers.)
Powering Senjo’s bid in Asia is its 2016 acquisition of Kalixa, a U.K. payments company using cloud computing and connecting to its customers via APIs. It has a large gaming clientele, although it also services retail clients such as Abercrombie & Fitch. It processes $15 billion in transactions annually, and Senjo wants to leverage its business and its technology to help investee companies in Asia.
At the same time, Kalixa has many European business customers who would like to launch or expand commercial dealings in Asia, but who face a complex set of payments relationships; Senjo would like to create a single gateway for them to process transactions with Asian counterparts.
In Europe, Kalixa processes transactions using Visa and MasterCard networks, but in Asia, many of these processes are done directly via acquirers, in cases where small businesses lack traditional banking or credit-card relationships. Lock says this could be an opportunity for Senjo to differentiate itself in the region.
Senjo is looking to invest in later-stage payments businesses, those that are profitable or have a clear path to profitability, and which would let Senjo exit after four or five years. With lending companies, Lock says the company is open-minded, and willing to take Series A or even seed stakes; he says it’s even possible that companies using crypto-currency solutions are potential investments, if merchants begin to adopt these and if the coins are being used for purposes other than speculation.