Collectius, a credit management servicing company, will launch a US$60 million regional investment platform with IFC, a member of the World Bank Group who has also become a minority equity shareholder in the company.
The platform is solely dedicated to acquiring and resolving unsecured debt in Indonesia, the Philippines, Malaysia, Thailand and soon Vietnam.
The new initiative is IFC’s first in Asia and aims to sustain the financial stability of the economy by supporting regional banks to strengthen their balance sheets by outsourcing the management of their NPLs, assisting debtors with their credit requirements and rehabilitating the debtor’s financial position.
The collaborative IFC and Collectius NPL platform is expected to operate as a model for other investors, by way of demonstration and replication channels, and increase market competitiveness and integration.
Collectius will also work with IFC to further to improve the regulation and resolution around debt collection and NPL work outs.
Gustav A. Eriksson, Founder and CEO, Collectius expressed:
Gustav A. Eriksson
“This is a momentous milestone in our journey as a company, and we are extremely proud to partner with IFC. The partnership strengthens our influence in the market and the capital increase means we can further support banks and finance companies that want to sell their NPL portfolios. Most importantly, the new platform allows us to not only assist individuals struggling with debt, but also move the industry towards higher standards in ethics and regulations.”
This investment is part of IFC’s strategy to build dynamic secondary debt resolution markets, allowing financial institutions to deal effectively with their NPLs and focus on lending.
In addition, IFC investments in this space aim to support credit rehabilitation of defaulted households and businesses to regain access to formal credit.
Collectius and IFC are together examining the industry with a view to designing best practices around debt monitoring and resolution, and how this may serve to beneficially affect regulations in Asia.
The post-pandemic economy may restructure the debt collection model in Asia. The economic storm caused by Covid-19 has resulted in a rising global debt load, pushing the world’s economies into financial crisis.
In Asia Pacific, S&P Global Ratings predicts regional banking’s non-performing assets and consequent credit losses could rise by US$600 billion and US$300 billion, respectively, in 2020.
Featured image: Edited from Pexel
