Majority-owned by PhillipCapital — the financial group founded by veteran financier Lim Hua Min and parent company of Phillip Securities — IFS is moving deliberately but decisively. Its licensed fund management arm, IFS Asset Management, is targeting $50 million in commitments for the fund from family offices, high-net-worth individuals and institutional partners, according to Sim.
Its first fund, started four years ago with $33 million, has since grown to about $40 million with annualised returns of more than 5.5%. While not spectacular, those returns are steady and the fund has not lost any money to date.
“We consider this a portfolio stabiliser,” Sim tells The Edge Singapore. “You’re not going to see crazy returns, but it’s very secure.”
For IFS, timing matters. Roughly two-thirds of the funds it lends are financed by bank borrowings, with the remainder from its own equity. That means the current shift toward easier monetary policy across Asia works in its favour.
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“As interest rates come down, our cost of borrowing goes down. That usually comes down quicker than our own rates,” says Sim. “And because we’re also a large borrower and more institutional, we’re able to get better rates from the banks.”
IFS faced painful net-interest-margin compression when interest rates rose sharply in 2022–2023 as the US Federal Reserve acted swiftly to fight inflation. Now, with policy easing underway in the US and Asia, Sim sees IFS entering a “sweeter spot” where spreads can normalise.
“Lower rates also provide some relief to our SME clients,” he says. Still, rising trade tensions between the world’s two largest economies and tariffs levied by the US on the rest of the world are raising plenty of uncertainty for lenders like IFS, he concedes.
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“We’re keeping close tabs on our key clients, especially those exposed to US demand or supply-chain shifts, trying to find out if there are any hidden tensions that we are not aware of.”
Building credibility in private credit
IFS’s private credit niche is asset-backed SME lending, typically secured against Singapore real estate. Borrowers are mostly business owners seeking short-term funding — one to two years — to finance projects or bridge working-capital gaps. Loans are conservative, with modest loan-to-value ratios and clear collateral.
“From an investor’s perspective, every dollar we lend is secured,” Sim says. “We run a tight valuation process and lend only where we understand the purpose of the debt. We always ask why a client needs financing.”
That insistence on what he calls “productive purpose” is deliberate. The company avoids speculative or opaque loans, preferring to fund expansion, new contracts or asset acquisition. “If you take on debt, you have to ensure that whatever you’re going to use it for has to give you higher returns than the cost of borrowing.”
The company’s private credit operation sits alongside its asset management and insurance businesses. These three pillars reflect its belief that a well-balanced financial ecosystem can serve SMEs holistically by providing funding, investor access, and risk protection under one roof.
The biggest challenge in private credit isn’t finding deals or managing defaults, but a lack of transparency. Private credit as an asset class is well established in the West and gaining acceptance in Asia. But opacity remains a defining trait.
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“I think the biggest challenge for us in order to be able to bring more institutional capital into this space so that our SMEs have access to that kind of capital is how to improve transparency,” says Sim.
That resolve has taken on new urgency after US subprime auto lender Tricolor Holdings and auto-parts supplier First Brands Group, both privately held, collapsed last month under heavy debt and opaque finances. Their implosions wiped out billions in investor capital and reignited public debate over the hidden risks in private credit.
To ensure none of its investors ends up in a similar situation, IFS wants to codify its credit-evaluation process, digitising every step from origination and collateral verification to collections. The goal, Sim says, is not just operational efficiency but verifiable trust.
“In the past, we depended on experienced analysts to sense anomalies in invoices or purchasing patterns. Now we’re embedding that expertise into systems so even new analysts can perform at a high level, and the process becomes auditable and repeatable.”
He envisions eventually linking this data backbone to external stakeholders – regulators, auditors and investors — via a blockchain-based ledger that records every transaction in immutable form.
By giving them direct assurance that it knows what it’s doing, and that no loan can be double-pledged or misreported, IFS hopes to set a new benchmark for transparency among regional lenders.
“If there’s that level of transparency and real-time monitoring, perhaps some of the issues (at Tricolor and First Brands) could have been avoided or caught earlier,” says Sim.
SME finance as anchor
Beyond its funds business, IFS remains deeply rooted in SME finance, particularly factoring, a form of financing in which a business sells its invoices or receivables to a third party at a discount to get immediate cash.
Across its four core markets of Singapore, Thailand, Malaysia and Indonesia, it provides invoice-based financing, asset-backed lending and leasing to smaller enterprises often overlooked by banks.
In Thailand, factoring has long been entrenched as an SME funding tool. IFS handles the bulk of its group-wide factoring volume there, at about $1.5 billion annually. In Singapore, it focuses more on asset-based loans secured by property. Its business in Malaysia specialises in government-contract factoring, while Indonesia is the group’s next frontier.
“Indonesia is still unfamiliar with factoring. Receivables financing probably makes up less than 3% of total lending there,” says Sim. “I’m like a shoe salesman in a market where people don’t wear shoes. Either I’ll be out of business or I’ve just chanced upon my biggest potential market.”
Education is key to cracking the Indonesian market, he says. “There’s definitely a need there.” He concedes that legal complexity and enforcement in Indonesia can deter financiers but believes his company’s regional experience gives it an edge. “We know how to navigate the credit waters in emerging markets.”
IFS is focusing first on export factoring for Indonesian SMEs selling to overseas buyers, where the legal framework is clearer. Domestically, it’s exploring supply-chain financing, partnering with large anchor buyers to finance their supplier networks.
In Thailand, where factoring is already mature, IFS is expanding supply-chain finance platforms that link anchor buyers and suppliers digitally. It sees itself as an ecosystem builder, helping buyers strengthen supplier relationships by providing easy access to funding.
“In a world of rising protectionism, building communities around supply chains is our way of promoting resilience,” Sim says.
Keeping insurance despite the pain
One business that continues to test IFS’s patience is insurance, particularly motor coverage. Its insurance subsidiary, ECICS, suffered substantial underwriting losses last year due to surging motor claims and a legacy bond default in the construction sector. The division remains loss-making.
ECICS has repriced high-loss segments and slowed growth to stabilise its portfolio. It is also diversifying into non-motor lines such as insurance for domestic helpers and home contents.
Despite continued losses and cut-throat competition, the insurance business still has a role in IFS, according to Sim.
“Motor insurance gives us an entry point into the family unit. It’s a platform to cross-sell other financial products. When a customer buys a motor policy from us, we can offer financing for their small business or household needs.”
Ambition vs caution
Rather than chase fintech valuations or consumer-lending booms, IFS is focused on steady, asset-backed growth. Partnerships play no small role. That includes tapping Japanese institutional capital.
Early last month, it inked a non-binding memorandum of understanding with Japanese financial platform Funds Inc to deploy the latter’s capital into asset-backed and structured credit investments designed for institutional and accredited investors.
The Asia Pacific-focused partnership also aims to open new financing avenues for creditworthy SMEs in the region that need growth capital but often find traditional funding out of reach.
“Funds Inc brings the capital, we bring the regional footprint and credit expertise,” Sim says. “Our role is to be the conduit for different types of capital to reach SMEs.”
Founded in 1987 and listed on the Singapore Exchange since 1993, IFS has evolved from a trade-finance specialist into a regional SME financier. It has more than 250 employees across Southeast Asia, focusing on private credit, asset management and insurance.
Together, these three pillars form a self-sustaining loop: lending creates income-generating loans, asset management channels investor funds into these assets, and insurance rounds out the loop by providing protection and access to customers.
While private credit is reshaping finance in the West, it is still finding its footing in Southeast Asia. PhillipCapital continues to anchor IFS’s funds, ensuring what Sim calls “skin in the game.”
From the looks of it, IFS is less about chasing size than about building substance. Its measured push into private credit investment, backed by real assets and disciplined underwriting, reflects a pragmatic response to the shifting tides of global finance.
Where others chase yield through leverage and financial engineering, IFS is carving out a niche in transparency and trust. Its ambition, it appears, is not to mirror Wall Street’s playbook but to serve a distinctly Southeast Asian need: connecting long-term capital with enterprising SMEs that power the region’s growth.
With interest rates falling and investors gravitating toward safer yields, this may be IFS’s moment to shine as it doles out solutions anchored in tangible assets and a belief that reliability is its true advantage.
