GoLogiq, Inc, a U.S.-based global provider of fintech and consumer data analytics, has signed a non-binding letter of intent to acquire all of Fram Venture 7 AB, a Swedish fintech corporation, for US$6 million in an all-stock transaction. Total consideration could increase to US$20 million depending upon the achievement of certain earn-out targets.
The acquisition includes all of Fram Venture 7’s equity interest in its wholly-owned subsidiary, DragonLend, a lending platform for profitable small and medium-sized enterprises (SME) in Vietnam. The acquisition is expected to complement GoLogiq’s existing fintech ecosystem, which encompasses a range of financial services, from payroll services to retirement investing.
DragonLend provides short-term (three to six months) working capital finance solutions to profitable Vietnamese SMEs. Although SMEs are critical to Vietnam’s economy, generating 40% of gross domestic product (GDP) and 50% of jobs, they are having challenges accessing finance, with approximately 62% of total SME financing needs unmet, according to a press release from IFC. IFC estimates Vietnam’s financing gap for SMEs is approximately US$21.7 billion.
DragonLend is addressing this opportunity by offering businesses fairer, faster and easier access to short-term working capital for fuelling their growth. Through the application of its proprietary risk model and working closely with its clients, DragonLend can issue finance solutions in a matter of days versus weeks or months as is typical of more traditional lending institutions. DragonLend’s vision is to become Vietnam’s most trusted and reliable working capital provider for profitable SMEs.
DragonLend was founded in 2019 and issued its first loan in 2020. Despite substantial Covid-19 restrictions and a challenging business climate, DragonLend has disbursed close to US$9 million since 2020, and plans to serve thousands of SMEs countrywide in the coming years with flexible product offerings and best-in-breed client service. DragonLend clients are primarily engaged in various supply chain verticals, such as manufacturing, wholesale and distribution.
The team behind DragonLend are experienced builders of companies in frontier markets. They are from the Swedish-Vietnamese investment group Fram Skandinavien (NASDAQ First North: FRAM B). This includes Fram Venture 7’s chairman, Christopher Beselin, who founded and previously served as CEO of Lazada Vietnam. Lazada Group was sold to Alibaba for US$3.5 billion.
“We believe market conditions are perfect for DragonLend to rapidly scale its SME lending platform in Vietnam, especially given how the country’s small business sector has been experiencing strong economic growth,” stated DragonLend CEO, Max Bergman. “We now have assembled years of valuable data for our credit scoring model, which can rely on for driving profitable growth.”
GoLogiq CEO, Granger Whitelaw, commented: “The acquisition of DragonLend would further our expansion into Vietnam with a proven business lending service that is highly complementary to our fintech ecosystem. We see its scalable platform enabling us to expand into other emerging markets across Southeast Asia, such as Singapore and Thailand.”
According to the World Bank, an estimated 65 million or 40% of MSMEs in developing countries have an unmet financing need of US$5.2 trillion annually, which is equivalent to 1.4 times the current level of global MSME lending.
Additional Proposed Transaction Details
Under the terms of the letter of intent, GoLogiq will acquire 100% of Fram Venture 7 and secure employment agreements with management. The company anticipates closing the transaction in September.
While GoLogiq expects the transaction to be completed as anticipated, a definitive agreement has yet to be signed and no assurances can be given it will be executed or the transaction will be completed as described. When such a definitive agreement would be mutually signed, the details would be made available in a Form 8-K to be filed with U.S. Securities and Exchange Commission on www.sec.gov as well as on the investor section of GoLogiq’s website.
GoLogiq’s recently announced a sale of its fintech assets to Recruiter.com Group (NASDAQ:RCRT) (NASDAQ:RCRTW) (“Recruiter”), a recruiting solutions provider. If such sale is consummated prior to the closing date of GoLogiq’s acquisition of Fram Venture 7, GoLogiq intends to assign its rights in its purchase agreement to Recruiter, whereupon Fram Venture 7 would become a subsidiary of Recruiter.
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