M-KOPA acquires more than $250 million of debt and equity for its asset financing platform

M-COPYthe asset finance platform that gives unbanked African customers access to “productive assets” and the ability to pay for them through digital micropayments, has raised more than $250 million in new funding.

The capital injection includes $55 million in equity and over $200 million in debt, huge sums in both categories that testify to strong fundamentals and solid performance for any growth-stage company in this VC’s current crunch. Following the $75 million in equity the Kenya-based fintech announced last March, M-KOPA has raised $245 million in equity funding since its inception in 2011.

Japan-based trading house Sumitomo Corporation, co-founder and CEO of M-KOPA jesse moore In a call with TechDigiPro, described as the type of investor whose long-term visions complement M-KOPA’s aspirations, led the growth equity, donating the lion’s share at $36.5 million.

“They share with us the conviction that, while the economy may falter, there is an undeniable trend towards progress and an undeniable trend that the technological enablement of financial and other digital services will only make the continent more successful” , the CEO commented on Sumimoto’s first significant fintech-focused investment on the mainland.

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

Unbanked customers in emerging markets face challenges due to low income, limited credit histories and lack of collateral. A strong credit scoring and identity infrastructure in developed markets allows for various credit options, allowing people to make large purchases through postpaid methods. However, in sub-Saharan Africa, where 85% of the population lives on less than $5.50 a day, it is difficult to make major purchases without credit, while access to credit remains limited. Also, In these markets, people have limited pre-existing financial identities and conventional collateral.

M-KOPA’s business revolves around using debt to finance the purchase of the 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 people to pay a small deposit for the two previous products and pay through micro-installments, which helps build their credit history over time. Default rates are just above 10%.

So far, M-KOPA has received just over $100 million in working capital financing for this payment cycle. It has doubled that amount with this new funding. Standard Bank, the largest bank in Africa in terms of assets, provided half of the “sustainability-linked” debt financing of more than $200 million. Development finance institutions: IFC, FMO and BII and funds managed by Lion’s Head Global Partners, Mirova SunFunder and Nithio supplied the remainder.

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

The asset funder also intends to: expand its financial service offerings and product suites and reduce greenhouse gas emissions in Kenya and Uganda, where its solar product is most prominent. However, what remains a top priority for the company is to continue to drive financial inclusion for women across all its operations (in 2020, when M-KOPA sold smartphones in Kenya, around 30% of its customers were women; two years later, it is now just over 40%, but the goal is to reach more than 60%, said the executive president of the company).

“Across all markets, a key issue for us, in terms of broader impact, is our ability to close the gender gap for our consumers and I think we’re starting to have a noticeable impact on that issue. Data shows that women in sub-Saharan Africa are 20% less likely than men to own a smartphone,” Moore said. “There is work to be done and our sustainability-linked facility is effectively an agreement between the lenders and M-KOPA to continue to try to outperform on that front, especially since the credit quality of the clients is better than that of the men globally, so tThe ability to reach more female consumers with life-enhancing smartphones and digital financial services is a win-win.”

Besides, last year, M-KOPA stated having provided more than $600 million in cumulative credit for its unbanked customers through a network of more than 10,000 agents. 52% of these agents are women, Moore revealed on the call, and the credit figure is now over $1 billion.

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

Given its success in East and West Africa, where it has sold more than a million solar home systems and helped avoid 2 million tons of carbon dioxide emissions, M-KOPA will now set its sights on South Africa, where Moore says the company is ready to open a pilot operation in the coming weeks. Electric mobility is also a category that the ten-year-old asset financier, which directly employs almost 2,000 people in Africa, plans to test, starting in Nairobi.

“There’s a huge demand for life-enhancing products like smartphones and solar systems that are hard to afford, but we’ve made them affordable and accessible for our customers,” Moore said. “Our next category in R&D right now is electric motorcycles. We are very excited about electric mobility and we are confident that in the next two decades, there will be a big change in ownership where electric motorcycles will scale when there is financing to accompany them.


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