[Updated] Indonesian credit platform FinAccel scraps SPAC merger with Victory Park

Editor’s note: This article has been updated with comments from Akshay Garg, Co-Founder and CEO of FinAccel, given at a news conference on Wednesday.

Indonesia’s digital consumer credit platform FinAccel, the parent company of Kredivo, has scrapped its merger with Victory Park Capital’s (VPC) second special purpose acquisition company (SPAC).

Elaborating on the SPAC deal being called off, Akshay Garg, Co-Founder and CEO of FinAccel said: “Because of the major market correction that’s been going on, redemptions have become very high in all SPACs. It became very clear to us and our sponsor, VPC, that it is going to be impossible to meet the minimum cash condition that was negotiated in our SPAC agreements.”

SPAC redemption rates — an indicator of investor confidence in a successful SPAC merger — currently sit at record highs since the SPAC boom took off last year.

At the same time, Garg said, the transaction was expected to be delayed owing to tightening SEC scrutiny of international mergers such as the SPAC deal.

“[Lawyers] have advised us we’re looking at a minimum of six, or more realistically, nine-month window to get the SEC review done. What that means is that if we were to file our F4 now, instead of actually getting the deal done by August, which is the outside date of 12 months – we announced in early August [2021] – we will certainly go over that outside date.”

“The company still believes it’s the right long-term strategy to go public. We are going to look at all options over the next couple of years,” Garg added.

FinAccel and Victory Park first announced its SPAC merger in August 2021, which pegged the Indonesian lender at a $2.5 billion valuation at the time.

In a statement on Monday the parties added that the Nasdaq-listed SPAC is also “considering future options”, including seeking an alternative business combination.

In the event that VPC’s blank cheque firm liquidates, Kredivo will issue a penny warrant to the SPAC, providing it the ability to acquire a stake equal to 3.5% of the fully-diluted equity securities of Kredivo.

VPC is instead leading a $145 million private structured investment in Kredivo, which includes convertible debt, Garg said. There is also the option for the SPAC’s PIPE investors to invest in the company, he added.

“There is a lot of interest from some of those PIPE investors to come into the business given that the SPAC is terminated. We are in conversations with some of them to allow them to come in either alongside or in a separate construct to the VPC -led fundraise. “ 

Garg added that, while there is currently no urgency to raise further funds, the company could do so in the next one year. “Given that we’re not raising $400mil-plus via the SPAC IPO, we will in the midterm look to a private fundraise for our growth capital needs.”