Cashlez Targets Business Growth Through Company Acquisition

PT Cashlez Worldwide Tbk (IDX: CASH) plans to acquire companies to encourage inorganic business growth in 2022. To support this plan, Cashlez will raise funds through the Pre-emptive Rights (HMETD) scheme or rights issue in the first quarter of 2022.

This was conveyed by Cashlez during a media visit session to the DailySocial.id editorial team virtually. This session was also attended by Chief Revenue Officer Djayanto Suseno and Corporate Secretary Hendrik Adrianto.

His party revealed that Cashlez will hold the first stage of the rights issue with a value of $10 million or around IDR 143.8 billion which will be used as working capital and product development. 

Then, Cashlez will conduct the second phase of rights issue for acquisition needs. According to Djayanto, the company is currently compiling a roadmap for the next five years which includes an organic and inorganic business strategy. 

Regarding the inorganic strategy, Cashlez opened the option to acquire the company. However, Djayanto could not provide further details about the business categories and companies to be acquired.

“That’s why we want to fundraise through a rights issue. We are currently looking for investors who are ready to become standby buyers. There are foreign investors interested, there are also internal investors. We have submitted everything to our financial advisor, namely Bahana [Sekuritas],” he said.

According to him, the company will continue to empower existing resources to encourage organic business development. However, that alone is considered insufficient considering that Cashlez wants to develop a larger digital payment ecosystem.

“For us at this time, what is more appropriate is not what we will acquire, but how much funds are raised. That way, we can know what we can buy,” he added.

Aim for Online Merchants

For information, Cashlez pocketed 18 billion transactions in total from 436 merchants in 2016. By the end of 2021, the company had served 13,000 merchants in six cities connected to 7,000 EDC devices. 

Breaking down by merchant category, 30% of users come from the retail segment, 18% from restaurants, and 12% from fashion. Cashlez recorded a total Gross Transaction Value (GTV) in 2020 of IDR 5.9 trillion. 

Djayanto said that there will be a decline in GTV in 2021, which is around IDR 4.3 trillion to IDR 4.4 trillion. This decline occurred due to the closure of malls in a number of areas. This situation makes it difficult for merchants to sell.

To anticipate the decline, said Djayanto, Cashlez will continue to increase the number of merchants, but will focus on MSME merchants that serve online transactions. 

As a comparison, the composition of offline merchants at Cashlez is 90%, and the remaining 10% is online. This year, Cashlez will significantly increase the portion of online [transactions from merchants].

“Until now there has been no fintech that has the ability to [serve transactions] on an O2O basis. Usually it is only strong online. So we are the only ones who have O2O capabilities at this time,” he said.

Social Commerce

The trend of buying and selling products through social media, aka social commerce, is growing significantly in Indonesia. Apart from the large population of social media users, the Covid-19 pandemic situation in Indonesia has actually triggered the emergence of small business actors who sell online.

A number of reports project that social commerce trends will continue given that there is potential in tier 2 and 3 cities to start tasting online transactions. 

According to McKinsey research, social commerce transactions in Indonesia are estimated to account for $25 billion of the projected total GMV of e-commerce of $65 billion in 2022.

While referring to the Momentum Works report, social commerce is an attractive option for MSME players because customer acquisition costs are cheaper, and users are more flexible in exploring or finding the product they are looking for.

In the sampling, this trend is also predicted to provide a great opportunity for payment system needs, considering that MSME actors do not have access or the ability to provide it.