Tyme Group, the Singapore-headquartered digital bank with operations in the Philippines and South Africa, has raised $250 million in a Series D funding round. The group is targeting 2028 to go public.
The new valuation of $1.5 billion puts Tyme squarely in unicorn territory, but what’s more interesting about this deal is who’s putting money into the fintech.
Nubank, the giant digital bank from Brazil, committed $150 million of that round. Another important investor is M&G Investments, with $50 million.
Nubank will provide experience and insight that is meant to help Tyme expand into lending in the Philippines as well as get off the ground in new markets, says Coenraad Jonker, Tyme’s founder and CEO in Singapore.
Trading notes
Jonker says he met Nubank’s founder, Cristina Junqueira, at a private event in New York last December. They compared notes and entered more serious discussions in January this year.
“They grew interested in Tyme Bank and visited us in Cape Town and in Manila,” Jonker told DigFin. “We didn’t expect they’d end up leading the funding round, because they’re an operator, not an investment firm.”
But he describes Nubank’s desire to invest as optimal. Nubank will receive a seat on Tyme Group’s board but will not involve itself in operations or execution. However, it has a lot of experience that Tyme values.
Banking insights
Nubank’s first successful product in Brazil was credit cards based on data analytics, which it used to build a niche where the traditional banks were not active. Today it serves 100 million Brazilians, or 57 percent of the adult population, and has about a 10 percent market share of credit-card balances.
Tyme’s digital bank, on the other hand, has begun by focusing on payments and savings. Its Philippines unit, GoTyme, has flourished thanks to partnering with the conglomerate JG Summit, but it has not made a splash in lending. Its distinguishing product is an automated kiosk that onboards new customers.
“Digital banks start with one side of the balance sheet and then struggle to succeed on the other side,” Jonker said. “With Nubank’s insights, we can de-risk our scaling the asset side.”
He also looks forward to learning from Nubank’s experience in customer experience, branding and marketing, and product development.
Nubank has expanded into Mexico and Colombia, while Tyme is focused on opening in Indonesia and Vietnam. Jonker says for the next several years, that division of focus will continue.
While there are always granular differences between digital banks: Nubank, Revolut, KakaoBank, and others are quite different businesses once you consider the context and the details. Nonetheless, Jonker says some things are constant. “Data analytics show human behavior at a granular level is surprisingly consistent across countries. Partnering with Nubank gives us a running start.”
As of Q3 2024, Tyme Group says it has $358 million of customer deposits in the Philippines and $380 million in South Africa. Against that combined $739 million of deposits, its loan book is a modest $203 million.
It says the two businesses’ average cost of funding is 4.2 percent, compared to the 12 percent to 15 percent for fintechs that must access capital markets to fund their lending operations.
Long-term capital
The investment by M&G Investments is more of a pure investment. M&G is a global investment manager based in London (it used to be the asset-management arm of insurer Prudential Plc, but the businesses separated in 2019). Its total assets under management as of end 2023 was £313.5 billion.
M&G runs an impact fund called Catalyst focused on financial inclusion, healthcare and climate. Tyme mostly serves underbanked people: in the Philippines, 49 percent of its retail banking customers are unbanked or underbanked.
That feature attracted M&G, but Jonker says the important aspect of this relationship is that M&G is a long-term investor, that is interested in taking a stake in Tyme as a private company and is able to support it as a cornerstone investor once Tyme decides to go public.
“We’ll need continuous capital,” Jonker said.
He notes Tyme is the first digital bank in the impact fund’s portfolio. But he says there is no relationship should Tyme decide to offer wealth-management and investment products later on.
Asia growth
Jonker says Tyme’s expansion in the Philippines has been faster than expected. JG Summit has a network of grocers, shopping malls and other physical touchpoints with consumers. Jonker likens it to the kind of customer access that KakaoBank enjoyed on the back of Kakao’s messenger app.
Tyme also acquired a payroll lender in the Philippines, Savii, and is integrating that into its lending business.
The Series D money will finance the group’s expansion into Indonesia and Vietnam. Tyme is treading cautiously in these countries. It is piloting in Vietnam a merchant cash-advance program, which provides working capital to micro- and small-sized enterprises. A similar program is in the works for Indonesia.
Once those products achieve some success, Tyme will go in with a fuller banking proposition.
“We’re starting with merchant cash advances because it leads us to profitability faster,” Jonker said. “It’s a high-margin business. And we want to prove to regulators and the business community that we’re adding value.”
The product takes digital payments data to generate credit scores that it then integrates into the company’s value chain.
Jonker agreed to DigFin’s suggestion that this resembles Micro Connect, the Hong Kong-based fintech providing data-led loans to small businesses in China. He says there isn’t anything like this in Vietnam or Indonesia, from what he can see.
IPO 2028
Looking ahead, he says the group needs to achieve superior economics in South Africa and the Philippines, which he defines as a return on equity above 30 percent and a cost-to-income ratio below 30 percent. “That would show the structural advantages of doing retail banking our way,” he said.
On top of that, the group needs to demonstrate it’s got product-market fit in Indonesia and Vietnam.Then it will be time to go public. Jonker says New York is the most likely destination as it has the capital and liquidity, and an investor base that will understand digital banking models.
