The Lithuanian financial technology (FinTech) company SME Finance raised a 120 million euro investment from an alternative asset management company in the United Kingdom. With the help of the invested funds, the company is planning to increase its loan portfolio to 200 million euro this year.
“We have become the first representative of the sector in the Baltic States to receive an investment from this UK fund. Together with the other funds we have raised, this investment will further increase the availability of the SME Finance and SME Bank ecosystem offering financing for small and medium-sized businesses and will allow us to expand our range of services. As a result, we plan to grow our loan portfolio by another third this year: from the current amount of 160 million to 200 million euros,” said Mindaugas Mikalajūnas, CEO of SME Finance.
This year alone, the organisation’s loan portfolio grew by 70% – from 94 million to 160 million euros. According to Mikalajūnas, this rapid growth resulted from the creation of a unique SME Finance ecosystem that can offer fast and individually tailored solutions to the small and medium-sized business sector, which previously found it extremely difficult to obtain the necessary financing.
SME Finance is working together in one ecosystem with the digital bank SME Bank, which launched its activities in July and has already attracted 20 million euros in deposits from abroad.
“The deposits it has attracted and the bank’s service innovations will allow us to lend even more actively, to help businesses grow in all the Baltic countries. In the near future, we will begin offering a number of new borrowing and fund management services, while our automation tools and innovative financing platform will ensure an even faster delivery of financing solutions to our customers. By using these tools, we will be a strong competitor not only in the Baltic States, but also in the wider European market,” added Mikalajūnas.
The ecosystem of SME Finance, which is focused on small and medium-sized businesses, will soon serve its customers on a one-stop-shop basis. By connecting to the SME Finance platform, each client will be able to receive all the required financing services in one place. If a client needs banking services, he will be referred to SME Bank – and if alternative financing services are needed, he will be referred to SME Finance. The system based on AI solutions will allow each company to receive the most suitable solution for its business, faster and more efficiently.
According to the CEO of SME Finance, the financial ecosystem model developed by FinTech and digital banking is unique in the Baltic States. It is planned to expand this system to other European markets including Finland, Poland, Germany and Spain.
Currently, more than 2,000 companies are customers of the businesses that operate as part of the SME Finance ecosystem; nearly 90% of the funding provided is allocated to micro (44%) as well as small and medium-sized enterprises (45%). Furthermore, the largest part of the portfolio – as much as 75% – is comprised of business loans (120 million euros), while factoring makes up 18% (EUR 28 million), and leasing and operating leases comprise 7% (EUR 12 million).
According to data from the second fourth quarter of 2021, traders (34.3%) are the leading customers of the SME Finance ecosystem, followed by representatives of the manufacturing (24.8%) and service (14.2%) sectors. More than 10% of the portfolio is related to the logistics sector, while construction, agricultural and real estate businesses each comprise less than a tenth of the portfolio.
About SME Finance and SME Bank
The Lithuanian finance company SME Finance, which started its operations in 2016, is currently the largest non-bank financing technology platform in the Baltic States, providing financing in the amount of 770 million euros. The company, together with the neobank SME Bank, manages a 160 million euro funding portfolio in a single ecosystem. In February of this year, SME Bank was licensed by the European Central Bank and officially launched its operations in June. The SME Finance ecosystem provides loans, leasing, factoring, credit lines and day-to-day banking services.