Will Cebu Pacific join Billionaire Founder Gokongwei‘s fintech Cashalo venture?

8 Jun 2018, Philippines – The second richest man in Philippines, John Gokongwei’s JG Summit Holdings Inc has teamed up with Fintech startup Oriente to invest US$200 million in a mobile-based venture that will provide financial services to millions of unbanked Filipinos (see Bloomberg report). This new venture, Cashalo will provide an alternative to high interest loans imposed by finance companies and even loan sharks in the Philippines. Interestingly, JG Summit Holdings is also the parent company of Cebu Pacific Air with a 66.15% stake. While Cebu Pacific Air’s involvement has not been announced, the joint ownership does raise the intriguing possibility of Cashalo tapping into Cebu Pacific Air’s wealth of passenger data.

The division of labor at Cashalo

Oriente is helmed by Lu.com founding member Hubert Tai and Skype co-founder Geoffrey Prentice. Lu.com, formerly known as Lufax is one of China’s largest internet financial services platforms. Basically, Oriente will provide the technology while JG Summit will provide the local expertise and connections (Philippines’ second richest person, John Gokongwei has an estimated fortune of US$5.5 Billion and controls JG Summit Holdings, one of the largest and most diversified Filipino conglomerates).

Cebu Pacific Air – Not just a regional Low-Cost Carrier (LCC) but the dominant airline in Philippines

Cebu Pacific Air (1Q18)

  • Fleet: 63 aircraft
  • Destinations: 63
  • Air routes: 108
  • Market share on domestic routes: 53%
  • Market share of international routes: 19% (second to Philippine Airlines’ 28%)
  • Total number of passengers carried per annum: 19.7 million (in 2017)
  • Top 5 domestic destinations: Manila, Cebu, Davao, Iloilo, Puerto Princesa
  • Top 5 international destinations: Hong Kong, Singapore, Seoul, Taipei, Tokyo

(Full Disclosure – I was the lead equity analyst for Cebu Pacific Air’s IPO in 2010 while at J.P. Morgan)

Chart: Number of passengers flown by Philippines-based carriers (2017)

Number of passengers flown by Philippines-based carriers (2017)

Will Cebu Pacific Air do a Filipino ‘BigPay’?

In March 2018, Asia’s largest LCC, AirAsia launched BigPay, its digital financial services platform that seeks to monetize AirAsia’s vast passenger database and even expand into money lending and remittance within Southeast Asia. AirAsia CEO Tony Fernandes believes that BigPay will eventually exceed even AirAsia in market value.

For more info on airlines monetizing passenger data, see our section on Digitalization (Aviation)

The potential for Cebu Pacific Air to do something similar to AirAsia’s BigPay clearly exists and in fact, Cebu Pacific Air is in an even better position given founder Gokongwei’s Casholo venture as well as his bank holdings, extensive local expertise and connections in the Philippines.

Cebu Pacific Air’s strongest advantage lies in Remittance, a US$33 Billion industry in Philippines

The fact that more than two third of Philippines’ adult population is unbanked presents a huge Fintech investment opportunity in terms of money lending. But Cebu Pacific Air’s strongest advantage in Fintech may actually lie in Remittance. In 2017 alone, the World Bank estimated US$33 Billion of Remittance into Philippines by its overseas workers. Given Cebu Pacific Air’s dominant carrier status and LCC market positioning, it is likely that Cebu Pacific Air transports a disproportionately large percentage of Philippines’ overseas workers, representing a huge treasure trove of user data for integration with Casholo.

Chart: Philippines – Domestic airline market share (1Q18)

Philippines – Domestic airline market share (1Q18)

Chart: Airline market share on international routes between Philippines and the rest of the world (2017)

Airline market share on international routes between Philippines and the rest of the world (2017)


Independent Research Declaration: Crucial Perspective does not own any position in the equities featured in this report nor have we received any compensation for writing this report. 


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