IFC invests $7 million in local fintech firm First Circle


The International Finance Corp. (IFC) has acquired a stake in fintech company First Circle for $7 million (about P410 million), to help boost lending to small and medium enterprises (SMEs) in the Philippines.

A June 15 disclosure showed that the IFC board approved on June 13 its equity investment in Singapore-registered Carabao Capital Global Pte Ltd., which operates in the Philippines as First Circle.

The private sector arm of the World Bank Group said this investment aims to support First Circle as it raises funds to scale up its operations and loan book in the Philippines, where SME credit penetration is among the lowest in Southeast Asia.

“With data and technological edge as the cornerstone of First Circle’s strategy, the company is providing unsecured credit lines to SMEs with competitive rates, flexible repayment options, and the convenience of fast digital operations,” the IFC said.

The IFC expects its equity infusion into First Circle to “promote systemic changes in the SME finance market” in the country, as more loans to currently underserved small businesses at scale would hopefully make SME lending more viable to traditional banks and technology-based lenders.

Before the IFC equity, First Circle’s shareholders included fintech impact investor Accion Venture Lab, institutional asset manager and fintech investor Fasanara Capital, technology venture capital firm Insignia Ventures, venture capital firm Venturra Capital, plus other local and global investors.

In May, the IFC injected $7 million into fintech firm Salmon to bolster financial inclusion through artificial intelligence (AI) in the Philippines.

Its equity in United Arab Emirates (UAE)-registered Fintech Holdings Ltd., which operates three Philippine subsidiaries under the Salmon brand name, was invested on May 16, according to the investment information summary on the IFC’s website, updated on May 19.

Earlier, the IFC board approved the investment on February 22 and signed the project on May 3.

An IFC statement in April said its investment in Salmon was part of the company’s $25 million Series A extension round (Series A-1) fundraising.

The IFC was a lead investor with Singapore-based private equity fund Northstar Group, ADQ/Lunate, and other Filipino and international investors.

“The capital will enable Salmon to develop new credit products and a lifestyle banking offering, which Salmon plans to launch in the second half of 2024,” the IFC said in a statement.

Salmon was established in 2022 and currently runs a rural bank in Laguna province, which it acquired early this year.

According to the IFC, the fintech company uses AI-enabled technology and a proprietary credit engine in its short-term consumer loan offerings like Salmon Cash Loans, Salmon Credit, and Salmon Installment.

The Bangko Sentral ng Pilipinas’ (BSP) 2022 annual report on its national strategy for financial inclusion shows that just 25 percent of adults in the country had access to formal credit, as they remain widely underserved by brick-and-mortar lenders.