ARQCapital allots P1.5B for 'smart capital' investments
Updated: Jul 5
THE MANILA TIMES
June 11, 2022
Ed Paolo Salting
PHILIPPINE mezzanine investor ARQCapital Partners (ARQ) announced that it is pushing "smart capital" investments in the private and financial technology lending space by raising P1.5 billion to fund as many as 50 medium enterprises (MEs) with high growth over the next two years.
"There are a few 'smart capital' investors in the Philippines today and this space has yet to be institutionalized," ARQ founding partner and Chief Executive Officer Edmund Solilapsi said in a media launch.
He said the country's financing market is dominated by banks and non-bank financial institutions, which are primarily passive capital providers and predominantly asset-backed and this environment leaves small to medium enterprises with more traditional but similar businesses uniquely challenged to find the right capital partner to fuel their growth.
"The Philippines continues to be second to the lowest in Asean in terms of private sector credit as a percentage of gross domestic product, domestic credit-to-private sector by banks and other similar lending tools are all provided by the financial sector," Solilapsi continued.
He further foresees a number of enterprises encountering capital funding hurdles due to more stringent bank requirements and hopes that other companies like them emerge as well. With the company's success in raising capital, it plans to fund 10 more MEs by year-end to add to its current portfolio, which now stands at 22. In addition to this, it is also raising additional capital from development institutions to fund its investments.
In the same launch, ARQ co-founder and managing partner Abigail Tan, meanwhile, said the market base for smart capital investors could be worth over P25 billion or $480 million.
"We typically support entrepreneurs requiring more than P25 million during their companies' high-growth phase, especially those with revenues hitting between P100 million and P500 million," said Tan.
And now that the country is rising from the pandemic, Tan said that ARQ will now focus on supporting companies engaged in the "building blocks of transformation" that drive economic growth.
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