The country’s pioneering mezzanine investor for small and medium enterprises (SMEs) has provided approximately P300 million to companies engaged in affordable housing and “instant credit” as it advocates sustainable financial inclusion in the Philippines.
Through its ARQ SME Business Development Company, ARQCapital Partners (ARQ) has supported since last year the capital requirements of the Atharra Group for its two affordable housing projects in Bohol and fintech startup Advance Tech Lending Inc. (Advance) for its on-demand earned wages platform for salaried employees.
The two companies are among ARQ’s current portfolio of more than 20 high-growth medium enterprises (MEs), which includes renewable energy firms CleanTech Global Renewables Inc. and Magnus Renewable Tech Corp., and affordable housing developers Vester Corp. and Investphil Realty.
ARQ is also raising funds to reach its target of P2.5 billion in investments to fund 50 high-growth MEs in the country over the next three years.
“ARQ is supporting Atharra and Advance to become significant players in their respective industries, which is consistent with our goal to invest into promising medium enterprises tracking a path of sustainable growth,” ARQ founding partner and CEO Edmund M. Solilapsi said.
The country’s first “smart capital” investor, which provides strategic management direction and other business development tools beyond capital, has deployed about P1.5 billion to more than 35 investees since 2014.
Solilapsi said ARQ also considered the social impact of investing in Atharra as the property firm provides high-quality affordable homes in Bohol, contributing at least 13 percent of the economic housing need in the island-province.
He said there is a total housing backlog of at least 800,000 units a year in Visayas and Mindanao alone, citing government data.
“Atharra has also shown a six-year track record as a credible and trusted developer of affordable homes under its founder, Darrel Digal, a young and passionate serial entrepreneur,” Solilapsi said.
Atharra has built more than 200 housing units in Baclayon and over 50 units in Tagbilaran City under its Atharra Residences brand, while at least 490 units are under construction.
Meanwhile, ARQ forayed into venture debt with Advance, the country’s first on-demand earned wages access provider, as Advance raises funds for its lending activities.
ARQ supports Advance’s efforts to partner with employers that can extend salary advances to its employees who in turn use them to pay for unscheduled expenses. The “instant credit” is disbursed in less than a minute through Advance’s proprietary technology platform.
“We have supported credible fintech players in the country since 2019 as we push for responsible and sustainable financial access for Filipinos,” Solilapsi said.
He said ARQ supports responsible credit providers with efficient customer acquisition strategy, but “mindful of a typical startup burn rate.”
ARQ said Advance aims to “restore the dignity of employees by giving them financial flexibility to pay their bills or cancel their debts.”
By providing financial lifeline to employees, Solilapsi said the company is helping organizations grow, boost employee morale, and enhance their retention and productivity
“Advance’s founders have efficiently streamlined its solution for employees to avail of advances within seconds, staying true to its promise of instant credit,” Solilapsi said.
ARQ has provided mezzanine financial services to the underserved SMEs since 2016, bridging the capital gap requirements of high-growth entrepreneurs.
According to ARQ, MSMEs, which make up 99.5 percent of all enterprises in the country and contributed 35.7 percent in Gross Value Added in 2020, received only 4.6 percent of total loans disbursed by the banking system.
ARQ also said that among the ASEAN countries, the Philippines ranked second to the last—ahead only of Indonesia— in Domestic Credit to Private Sector as a percentage of GDP at 52 percent, while its neighbors registered an average of 130 percent in 2020.
“ARQ will continue to respond to the need of SMEs for appropriate and sustainable capital during their growth phase, ensuring that these value-adding partnerships will help elevate the financial inclusion of SMEs and push for a sustainable economic growth for the Philippines,” Solilapsi said.
