JAPAN’S MUFG Bank is set to launch a joint venture (JV) with an Israeli fintech in Singapore this year to provide debt financing to Asia-Pacific startups, especially those unable to access such funding from traditional financial institutions.
In a press release on Friday, MUFG Bank said that the JV will be called Mars Growth Capital. The bank’s JV partner is Israel’s Liquidity Capital, a two-year-old firm that has a credit-scoring artificial intelligence (AI) platform that it says is able to forecast revenues.
Mars Growth will be 50:50 owned by MUFG Bank and Liquidity Capital. The JV will establish a debt fund, in which MUFG Bank will serve as a limited partner, with an initial capital commitment of US$80 million. Mars Growth and the fund will both be set up this year, and business is also expected to kick off this year.
Liquidity Capital’s credit-scoring model taps on financial and accounting data from client bank accounts, accounting systems and customer relationship management systems to predict cash flows and revenues. As such, the firm claims to be able to score young startups which are unable access to debt financing from financial institutions.
MUFG has previously invested in Liquidity Capital’s technology via its corporate venture arm, Mitsubishi UFJ Innovation Partners Co.
The Mars Growth JV thus enables the expansion of Liquidity Capital’s business and market value, and while reinforcing MUFG’s commitment to growth in Asia-Pacific through the provision of advanced financial services, MUFG Bank said in its press release.
In addition to acquiring a new client base, the bank also hopes to deepen its understanding of Liquidity Capital's technology and seek opportunities for further collaboration, to enhance its business model in Japan and elsewhere.
Masato Miyachi, chief executive of global corporate and the investment banking business unit at MUFG Bank, said: “In the era of digital transformation, this partnership will enable us to become more competitive and relevant to our clients, and through the provision of innovative solutions for the startup companies we will be able to further promote financial inclusion and sustainable growth in the region.”
Likewise, Ron Daniel, chief executive of Liquidity Capital, said: “Working on the development together with MUFG has been an exciting and positive experience for all the team at Liquidity, and we are looking forward to an ongoing strong relationship together.”