Venture Capital: Brazilian Lender Creditas Raises $255M To Fuel Expansion

December 21, 2020 | FinTech, News, Venture Capital
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Creditas, which is backed by SoftBank, is the largest fintech for secured loans in Brazil.

Brazilian fintech and lender Creditas announced Friday fundraising of $ 255 million led by impact investor LGT Lightstone. This fifth Series E round valued the start-up at $ 1.75 billion, more than double the valuation of $750 million it secured last year in a D round.

Existing investors including SoftBank, Kaszek and Amadeus Capital Partners, and VEF participated in the funding. New investors were Tarsadia Capital, Wellington Management, e.ventures, and Sunley House Capital, an affiliate of Advent International.

Use of funds

Creditas will deploy the funds for boosting its international expansion program as well as growing its loan book.

Its recently launched Mexican subsidiary commenced lending in July. Some of the funds raised in the current round will flow to boost its lending capital.

The company also plans to recruit additional technology personnel to support its growing operations.

Crucially, with the new capital, Creditas expects to nearly double its loan book to over 2 billion reais ($389 million) in the coming year.

The company finances loans that are secured by collateral such as homes, autos, and salaries. Brazil’s traditional lenders are reluctant to provide these credit lines on fears of default. In addition, they charge very high rates of interest.

The LatAm opportunity

“We started by questioning high interest rates in Brazil and we never stopped growing,” says the Creditas website.

Spanish consultant Furio founded Creditas in 2012.

“The company has the perfect combination of a team with a very high delivery capacity and a huge addressable market that is poorly served by financial institutions,” said Marcos Wilson Pereira, Managing Partner of LGT Lightstone at Brazil.

SoftBank

SoftBank, a Creditas backer, plans to invest $3 billion in Latin America after its early-stage investments in the region proved successful, according to S&P Global.

Latin America suffers from one of the lowest levels of growth equity capital in the world. SoftBank, therefore, sees opportunities in e-commerce, printer, and insurtech.

Specifically, there is a huge opportunity in fintechs. Paulo Passoni, the managing partner at SoftBank Group International, said to S&P Global: “Return on equity against the risk-free rate in each country is still higher in Latin America than almost anywhere across the globe. That is the opportunity of the fintech sector.”

“Banks have made a lot of money and became owners of every single vertical of finance from insurance to acquiring business to wealth management. They own it all: that has created a very fat system. Entrepreneurs love fat because it means that there is money to be made,” he added.

“Creditas is at the beginning of a journey to penetrate the underexplored credit market in Brazil and Mexico,” Passoni said in a statement on the latest funding.

Related Story:  SoftBank Steps Up LatAm Focus With $1B Investment Plan

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