M-KOPA snaps up $250M+ debt, equity for its asset financing platform


M-COPYthe asset financing platform, which gives underbanked African customers access to “productive assets” and the ability to pay for them via digital micropayments, has secured over $250 million in new funding.

The capital injection includes $55 million in equity and over $200 million in debt, huge amounts in both categories that attest to strong fundamentals and solid performance for any growth-stage company in the current contraction of this venture capital. After raising US$75 million in equity, which the Kenya-based fintech announced last March, M-KOPA has raised US$245 million in equity funds since its inception in 2011.

Japan-based trading house Sumitomo Corporation, co-founder and CEO of M-KOPA Jesse Moore in an interview with TechCrunch, described as the type of investor whose long-term vision complements M-KOPA’s aspirations, led the growth capital and donated the lion’s share of $36.5 million.

“They share with us the belief that, despite eventual fluctuations in the economy, there is an undeniable trend towards progress and the undeniable trend that the technological enabling of financial services and other digital services will only make the continent even more prosperous,” commented CEO of Sumimoto’s first significant fintech-focused investment on the continent.

The company, known for its infrastructure businesses in Africa, said in a statement: “By leveraging all expertise and resources, we believe this partnership will have a positive impact on both the financial and telecom sectors and ultimately people’s lives across the region.” continent.” Meanwhile, in addition to Sumimoto, Blue Haven Initiative, Lightrock, Broadscale Group and Local Globe’s sister fund Latitude also participated in the equity round.

Customers in emerging markets who do not have adequate bank accounts face challenges due to their low income, limited creditworthiness and lack of collateral. A strong identity and credit scoring infrastructure in developed markets enables various credit options and allows individuals to make large purchases through postpaid methods. However, in sub-Saharan Africa, where 85% of the population lives on less than US$5.50 a day, it is difficult to make large purchases without credit, while access to credit remains limited. Also, In these markets, individuals have limited pre-existing financial identities and conventional collateral.

M-KOPA’s business revolves around using debt to fund customers’ purchases of the products and services it sells, such as smartphones and solar power systems, as well as providing loans and health insurance in four markets: Kenya, Uganda, Ghana and Nigeria . With its flexible lending model, the company allows individuals to make a small down payment for the above two products and pay them off in micro installments, helping to build their credit history over time. Failure rates are a little over 10%.

To date, M-KOPA had received just over $100 million in working capital funding for this repayment cycle. With this new funding, that amount has doubled. Standard Bank, Africa’s largest bank by assets, provided half of the more than $200 million in “sustainability-related” debt financing. Development finance institutions: IFC, FMO and BII, as well as funds managed by Lion’s Head Global Partners, Mirova SunFunder and Nithio provided the rest.

Moore pointed out in a TechCrunch interview that the financing, one of the largest combined debt and equity raises in the African tech sector, will allow M-KOPA to double the size of its now 3 million customer base in existing markets (a metric , which has already been reached). witnessed one 85% CAGR from 2020 to 2022.)

The asset financer also intends to: is expanding its financial services offering and product range and reducing greenhouse gas emissions in Kenya and Uganda, where its solar product is more prominent. However, it remains a top priority for the company to further advance the financial inclusion of women in all its operations (in 2020, when M-KOPA was selling smartphones in Kenya, about 30% of its customers were women; two years later it is well like that). just over 40%, but the goal is to get over 60%, the company’s CEO noted.)

“Across all markets, a key issue for us to have a broader impact is our ability to close the gender gap between our consumers, and I think we’re starting to address that issue in a meaningful way. Data shows that women in sub-Saharan Africa are 20% less likely than men to own a smartphone,” said Moore. “There is still work to be done and our sustainability-linked facility is effectively an agreement between lenders and M-KOPA to continue trying to outperform in this regard, particularly as the quality of loans from female customers globally surpasses that of men surpassesBeing able to reach more female consumers with life-improving smartphones and digital financial services is a win-win for us.”

Additionally, Last year M-KOPA claimed Having provided over $600 million in cumulative credit to its underpaid clients through a network of over 10,000 agents. 52% of those agents are women, Moore revealed in the call, and the loan total is now over $1 billion.

Various models such as agency banking and community based finance are tackling the problem of financial inclusion in Africa. But the pay-as-you-go model used by M-KOPA, which starts with providing assets on a credit sale basis (as a wedge fintech product) and builds on this relationship to sell financial services via partnerships (e.g It has partnered with Turaco to offer health insurance) is unique in itself and, according to Moore, is “highly scalable, very commercially sustainable and having tremendous impact.”

Given its success in East and West Africa, where the company has sold over a million solar home systems and helped avoid 2 million tonnes of carbon emissions, M-KOPA will now have its sights set on South Africa, where Moore says the company is ready in the will open a pilot operation in the next few weeks. Electromobility is also a category that the ten-year-old wealth financier, which directly employs almost 2,000 people across Africa, wants to test first in Nairobi.

“There is a huge demand for life-enhancing products like smartphones and solar panels that are difficult to afford, but we’ve made them affordable and accessible to our customers,” Moore said. “Our next category in research and development right now is electric motorcycles. We are very excited about electric mobility and are certain that there will be a major change in ownership over the next few decades, where electric motorcycles will scale if the appropriate financing is available.”

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