By Kylie Madry
MEXICO CITY: Mexican used-car platform Kavak on Tuesday mentioned it had secured $675 million in financing from HSBC to again the corporate’s automobile mortgage choices, including to different current credit score traces agreed with Goldman Sachs and Santander totaling $135 million.
The deal will put extra drivers on the streets in Latin America, the place just one.5 of each 10 residents have a automobile, in keeping with Kavak, which operates in Brazil, Colombia, Argentina, Chile and Peru in addition to Mexico.
The HSBC financing comes within the type of a ahead stream settlement, Kavak mentioned, during which the financial institution will purchase assortment rights for a set of Kavak’s used automobile loans.
“My understanding is that this had never been done with a portfolio like this, for cars,” Chief Financial Officer Moises Flores informed Reuters.
The funding may also be used to decrease boundaries to entry automobile loans normally, Kavak mentioned, as a big swathe of Latin Americans lack formal financial institution accounts or credit score choices.
The HSBC deal provides to just lately agreed asset-back credit score traces for $100 million from Goldman Sachs Group Inc and $35 million from Spain’s Santander, in keeping with the corporate.
“The risk of lending to Kavak is low,” Flores mentioned. “They’re also looking at our portfolio, our financing, and they say, ‘Looks good.'”
Kavak, which calls itself the biggest pre-owned automobile operation on the planet, was Mexico’s first “unicorn,” a startup price greater than $1 billion.
At the second, SoftBank-backed Kavak claims to be price greater than $8.7 billion.
The ahead stream settlement permits Kavak to increase its lending with out risking its valuation. Carvana Co, a listed U.S. firm with an analogous enterprise mannequin, has seen its market worth crater to $6.3 billion from a excessive of $58 billion final July.
Taking Tuesday’s agreements into consideration, the corporate may very well be on monitor to lift $1.2 billion in debt by the top of the 12 months, Flores mentioned, additionally hinting at potential enlargement into additonal markets to return.
The startup for the primary time expanded outdoors of Latin America, launching operations in Turkey, in July.
“We’ve financed ourselves pretty cheaply. Our debt is cheap, even under a AAA bond on the Mexican stock exchange,” he mentioned.