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Author: SGX   |   Latest post: Tue, 31 Jan 2023, 10:22 AM

 

Luminor Financial Leverages Asian SME Growth Engine

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Luminor Financial Leverages Asian SME Growth Engine

Self-starter Kwan Yu Wen is passionate about empowering small businesses to achieve big goals - and rightly so, as small and medium enterprises (SMEs) constitute the backbone of most economies in the region.

“SMEs form a critical pillar of the economic system of most countries - they drive growth, job creation and generally contribute to about 80% of any economy, but they are massively underserved the world over,” the Executive Director of SGX-listed financial solutions provider Luminor Financial Holdings Ltd pointed out.

“That’s where Luminor Financial has stepped in - we identified a huge gap in the market where SMEs are unable to obtain financing from traditional banks for various reasons,” she noted.

“We sieve out companies running steady, honest operations, those with contracts in hand and who simply need to plug cashflow gaps. Our assistance enables them to complete their contracts and gain confidence to expand further, knowing that we are there to support them - not just financially but in terms of corporate advisory as well.”

So far, it’s been an inspiring journey, she admitted. “We’ve been doing this for about three years now. Having seen so many of our customers succeed and grow, we can say we’ve made an impact for sure, and that gives me and my team tremendous satisfaction and motivation to move forward.”

Since graduating from Singapore Management University with a Bachelor of Science (Economics) degree, Kwan has held various management roles in fund management and SGX-listed companies. Over the years, she has honed her core leadership values around empowerment, communication and respect. 

“At the end of the day, people need to feel seen, feel heard and be empowered. That’s instrumental in building trust and improving employee engagement, which is crucial for the success of any organisation,” she noted.

“You can have the best ideas in the world, but there’s no point if you don’t have a good team to execute it. My role is to create an environment in which team members can thrive, help them play to their strengths, and develop them into thinkers who are not afraid to speak out and question, so they can really grow with the organisation.”

Expanding Portfolio of Offerings

Listed on SGX Catalist and with operations in Singapore, China and Malaysia, Luminor Financial - formerly known as Starland Holdings Ltd - is a non-bank financial institution that aims to provide innovative financing solutions to SMEs across the region. The Group is primarily involved in delivering advisory services and funding solutions to address the growing demand for short-term financing among SMEs and consumers.

Luminor Financial first started out as a Singaporean-owned and managed property developer for quality integrated residential commercial properties in China and Singapore. In October 2019, shareholders voted for the Group’s diversification into the financial solutions business. 

Since then, the Group has employed a stringent risk management framework while growing its portfolio of service offerings, which comprise invoice factoring, supply chain financing, corporate advisory and secured loans, particularly in Malaysia and Singapore.

Moving forward, the Group will no longer focus on property development as it intends to sell all its remaining property inventory, including commercial units which have been leased out. Its last piece of land bank has also undergone repossession by the Chinese government.

Currently, Luminor Financial’s priority is to build and expand its business in Malaysia, Kwan noted.

“When we started out, we focused solely on funding clients that have contracts to supply goods and services to government and government agencies,” she added.

“We’ve recently started funding clients who have contracts with MNCs such as ExxonMobil, and GLCs such as Telekom Malaysia. These contracts tend to be larger in size, and hence have increased funding requirements, which contributes to a bigger loan book for us. This would definitely impact our revenues positively.”

Following rapid growth of the e-commerce market, the Group has also developed an innovative closed-loop inventory financing model for e-commerce market resellers on platforms such as Lazada and Shopee. 

“The inventory financing product could also be easily replicated in the FMCG e-commerce market. The e-commerce marketplace is an underserved market that we’ve been focusing on in our medium-term strategic initiatives.”

Spreading Regional Footprint

And now that Luminor Financial has established its non-bank financial institution (NBFI) infrastructure, it's ready to explore other markets, Kwan said.

“In the long term, our strategy is to grow organically and/or by acquisitions in the region, for example, in Singapore, Hong Kong, Australia, Indonesia and Vietnam for the consumer and SME markets, so as to build regional NBFIs.”

As part of the Group’s strategy, it recently subscribed to the Exchangeable and Convertible Notes issued by PT AdiWisista Daya Investama (PT ADI). PT ADI is part of the AdiWisista Group, which provides loans to small business and individuals in Indonesia through its P2P-lending platform, danai.id, and holds an Information Technology-Based Borrowing-Lending Service Provider license issued by the Financial Services Authority of Indonesia. 

Luminor Financial has also signed a Collaboration Agreement with the AdiWisista Group to explore potential business opportunities and partnerships within the financial services industry in Indonesia, Malaysia and Singapore.

“Indonesia is a huge market, and one that we’re eager to enter,” she added. “This is our first step in entering the market, albeit through an investment. We believe this collaboration is highly synergistic, and would allow us to build a deeper understanding of, and eventually gain a foothold in, the Indonesian market over the next three years.”

Despite a steady growth strategy in place, the Group faces a number of growing challenges in the industry, Kwan admitted.

“The fact that SMEs are underserved is a gap that many are trying to bridge. We believe the space will only get more competitive, with SMEs getting more and more funding options,” she noted. 

“For example, traditional NBFI lenders from North Asia such as the Japanese and Koreans are also entering these same markets, and such players tend to have larger balance sheets to lend. Fintech players are also finding a footing in this space, especially in the consumer market.”

On its part, the Group is constantly developing new funding structures to meet client needs and adding value to its offerings, such as providing corporate advisory services to help individual businesses expand, she said.

“At the same time, we’re conscious of shifts in the macroeconomic environment, and it’s important we do not lose sight of managing our risks versus returns in the chase for volume.”

Other issues that hover at the back of the 31-year-old's mind include attracting, motivating and retaining talent, as well as fine-tuning the Group’s strategy to expand into regional markets.

“We’re constantly seeking opportunities to develop an integrated financial services ecosystem, either through collaborations, or establishing the missing link ourselves. I’m always thinking about how to match borrowers and lenders in the fintech space, develop suitable products, or lower the cost of funding via different channels or pipes.”

For her team, Kwan has this advice to offer: Don’t be afraid to question or speak out, and never neglect to focus on yourself. 

“Focusing on yourself allows you to learn and grow, and consistently become a better version of yourself. When you do that, everyone around you will be able to see and feel it,” she said.

Luminor Financial Holdings Ltd

Luminor is a financial solutions business that aims to provide innovative financing solutions to SMEs across the region. The Group first started out as a Singaporean-owned and managed property developer for quality integrated residential commercial properties in China and Singapore. In 2019, the Group embarked on a transformative journey to diversify its operations into the Financial Solutions Business. Since then, Luminor has shifted its focus and expanded its service offerings into factoring, supply chain financing and corporate advisory, particularly in Malaysia and Singapore. By tapping its portfolio of offerings, the Group is committed to being a leading provider of innovative financial solutions to both consumers and corporates worldwide.

The company website is: www.luminorfinancialholdings.com

Click here for the company's StockFacts page.

For the half-year ended 30 June 2022 financial results, click here.

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic
Photo: Company file

kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.

For previous editions of kopi-C: the Company brew, please click here.  

For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.

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