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HomeTechM-KOPA raises $250M+ equity for its asset financing platform

M-KOPA raises $250M+ equity for its asset financing platform


M-KOPAthe asset finance platform that offers underbanked African clients access to “productive assets” and the ability to pay for them through digital micropayments has secured more than $250 million in new funding.

The capital injection is included $55 million in equity and more than $200 million in debt, huge sums in both categories that demonstrate strong fundamentals and solid performance for any growth-stage company in this venture capital’s current contraction. Following the $75 million in equity the Kenya-based fintech announced last March, M-KOPA has raised $245 million in equity since its inception in 2011.

Japan-based trading house Sumitomo Corporation, co-founder and CEO of M-KOPA Jesse Moore described in a conversation with TechCrunch as the type of investor whose long-term visions complement M-KOPA’s ambitions, led the growth capital and donated the lion’s share for $36.5 million.

“They share with us the belief that, while there may be fluctuations in the economy, there is an undeniable trend towards progress and an undeniable trend that the technological support of financial services and other digital services will only make the continent more successful.” said the CEO of Sumimoto’s first major fintech-focused investment on the continent.

The company, known for its infrastructure deals in Africa, said in a statement: “By leveraging every expertise and resource, we believe this partnership will have a positive impact on both the financial and telecommunications industries, and ultimately the lives of will enrich people all over the world. continent.” Meanwhile, Blue Haven Initiative, Lightrock, Broadscale Group and Latitude, the sister fund of Local Globe, participated in the equity round along with Sumimoto.

Underbanked clients in emerging markets face challenges due to low income, limited credit history and lack of collateral. Strong identity and credit score infrastructure in developed markets enables a variety of credit options, enabling individuals to make large purchases through post-paid methods. However, in Sub-Saharan Africa, where 85% of the population lives on less than $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 identity and conventional collateral.

M-KOPA’s business revolves around using debt to finance customers’ purchases of products and services it sells, such as smartphones and solar energy systems, as well as loans and health insurance in four markets: Kenya, Uganda, Ghana and Nigeria. With its flexible credit model, the company allows individuals to make a small down payment for the two products above and pay off via micro installments, building their credit history over time. Standard percentages are just over 10%.

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

Moore noted in a TechCrunch interview that the funding, one of the largest combined debt and equity increases in African tech, will enable M-KOPA to double the size of its now 3 million strong customer base in existing markets (a measure that already witnessed one 85% CAGR from 2020 to 2022.)

The equity financier also intends to: expand its financial services offerings and product ranges and reduce greenhouse gas emissions in Kenya and Uganda, where its solar energy product is more prominent. However, what remains a top priority for the company is to continue to drive the financial inclusion of women in all its activities (in 2020, when M-KOPA sold smartphones in Kenya, approximately 30% of its customers were women; two years later, it now stands slightly more than 40%, but the goal is to get to more than 60%, the company’s CEO noted.)

“In all markets, an important theme for us, in terms of wider impact, is our ability to close the gender gap of our consumers and I think we’re starting to make a remarkable impact on that issue. Data shows that women in sub-Saharan Africa are 20% less likely than men to own a smartphone,” said Moore. “There is work to be done and our sustainability-linked facility is essentially an agreement between the lenders and M-KOPA to keep trying to outperform on that front, especially as the quality of credit from female customers exceeds that of men across the board. surpasses the world.The ability to reach more female consumers with life-enhancing smartphones and digital financial services is a win-win for us.”

In addition, last year claimed M-KOPA to have extended more than $600 million in cumulative credit to its underbanked clients through a network of more than 10,000 agents. 52% of these agents are women, Moore revealed on the call, and the credit figure now exceeds $1 billion.

Different models, such as agency banking and community-based finance, are addressing the problem of financial inclusion in Africa. But the pay-as-you-go model used by M-KOPA, which starts by providing assets on a credit sales basis (as the wedge fintech product) and builds on that relationship to sell financial services through partnerships (for example it partnered with Turaco to offer health insurance), is unique in its own right and, according to Moore, “highly scalable, very commercially sustainable with tremendous impact.”

Given its success in East and West Africa, where it has sold more than a million solar energy systems and helped avoid 2 million tonnes of CO2 emissions, M-KOPA will now set its sights on South Africa, where it claims Moore is ready to launch a pilot project in the coming weeks. Electric mobility is also a category the decade-old asset financier, which directly employs nearly 2,000 people across Africa, plans to test out, starting in Nairobi.

“There is a huge demand for life-enhancing products like smartphones and solar systems, which are hard to afford, but we’ve made them affordable and accessible to our customers,” said Moore. “Our next category in R&D right now is electric motorcycles. We are very excited about electric mobility and we are sure that there will be a major change in ownership in the decades to come, with electric motorcycles scaling up if there is funding for it.”

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