NepFin, HSBC partner to expand lending for mid-sized companies

NeptuneFinancial, a fintech lending platform for middle-market businesses, partnered with HSBC to expand its lending universe.

The partnership will enable NepFin to access international debt markets and offer additional financial products to current clients, CEO Albert Periu told Buyouts.

NepFin’s clients will also get their loans quicker. A typical loan for a sponsor-backed company takes about eight weeks to access, Periu said. With HSBC’s backing, he said, this waiting time can be halved.

HSBC for its part will be able to leverage NepFin’s platform, which uses machine learning and data science to identify potential borrowers.

“By leveraging technology and data, we increase efficiency, which reduces costs,” Periu said.

The bank also gains access to NepFin’s client base, dominated by lower- and middle-market PE firms and other businesses with revenue of $10 million to $100 million.

While more deals are getting done with high valuations, the middle- and lower-middle-market segments are still reasonably priced, Periu said.

“There is a lot more fragmentation in the lower-middle market, given the infrastructure,” Periu said.

“Structurally it’s the same process to source, underwrite and manage a loan, whether it’s for a small company or a large company. The fixed costs associated are the same whether they are making a small loan or a large loan.”

Difficulty getting access to smaller loans is a global issue for lenders and sponsors, which is why partnerships between traditional banks and fintech firms are becoming more common, Periu explained.

“Collaboration between fintech firms and banks has always been our focus, but it’s now becoming the new industry norm, given how mutually beneficial in can be,” he said.

In 2017, JP Morgan Chase renewed its partnership with OnDeck, a fintech lending platform for small businesses, for up to four years.

Periu said he doesn’t rule out NepFin partnering with other banks.

Update: The headline to this report was updated.

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