Loans where credit is due – FinanceFeeds
Latin American fintech companies are expected to stay in the news until the holidays, as Brazil’s Creditas becomes the latest company in the region to raise new funds. The alternative lender has raised $ 255.0 million in new financing as its underlying business continues to grow. The last fundraising will enhance […]
Latin American fintech companies are expected to stay in the news until the holidays, as Brazil’s Creditas becomes the latest company in the region to raise new funds. The alternative lender has raised $ 255.0 million in new financing as its underlying business continues to grow.
The latest fundraiser values the company at $ 1.75 billion, which is good in Unicorn territory.
CB Insights research house recently reported that LATAM’s venture capital and private equity investments in fintechs had grown from just $ 50 million in 2014 to over $ 2.10 billion in 2020, these funds were spread over 139 transactions.
Names investing in Creditas in this cycle include LGT Lightstone, Wellington Management, Tarsadia Capital. They join a list of previous investor such as SoftBank’s Vision Fund, its Latam Fund and Amadeus Capital. In total, Creditas raised $ 570.0 million in external financing.
Creditas intends to use the new financing to expand beyond the home and auto finance loans it has built its business on to date and to expand its footprint in other LATAM markets with Mexico by top of the list for expansion.
Those watching this closely may recall a recent article on Mexican challenger bank ALBO, its own successful fundraiser, and the demographics of the Mexican market appealing to financial services disruptors.
Creditas was founded in 2012 from a cramped office in Sao Paulo, but has grown rapidly from those humble beginnings and now has over 1,600 employees working in four offices in Brazil, one in Mexico and another in Spain. .
The company’s loan portfolio is worth around $ 200 million, making it currently the largest Fintech secured lender in Brazil. Creditas is also approaching profitability with disclosed losses dropping from 74.90 million reals to 40.50 million reals.
New Creditas products will likely include payday loans and a “buy now, pay later” retail offering to consumers. It will also look to expand its existing auto loan franchise.
In a statement accompanying the announcement of the roundtable, Paulo Passoni, Managing Partner of SoftBank Latam Fund, said:
Brazil has a population of around 210 million and, like Mexico, many of these people live in urban areas. The average Brazilian is 31.40 years old and 65% of the population owns or uses a smartphone. This figure is expected to reach 75% by 2025 according to a study by Statista.com
Creditas looks like a growing company operating in underserved markets that has managed to attract substantial funding from some leading venture capitalists. On the other hand, it is a company that will have to deal with the highly cyclical nature of the Brazilian and other Latin American economies and which can prove to be very trying.