Verdant Capital Hybrid Fund has made a $7m dual tranche investment comprising a subordinated loan and senior secured loan to Mogo Auto, a subsidiary of Eleving Group operating in Europe, Asia, and Africa.
The investment will help Mogo Kenya expand its portfolio of motorbike (fuel and electric-powered two-wheelers, locally known as “boda-bodas”), tuk-tuk (three-wheeler), car, and car logbook or leaseback financing throughout the country.
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Mogo Kenya is the largest asset financing business of Eleving Group, established in 2018.
Mogo Kenya is one of Kenya’s leading fintech asset financing businesses, specifically for motorbikes (fuel and electric-powered), tuk-tuks, and cars, which remain an essential mode of transport and commerce in the country.
The Fund’s investment will provide Mogo Kenya with more funding for motorbike (fuel and electric powered), tuk-tuk, car, and car leaseback financing across the country. These financed vehicle assets are usually the principal source of income for the clients. Mogo Kenya’s business model provides an affordable route for its clients to attain financial stability, the ability to participate in the economy and, in many cases, the first opportunity to have tangible wealth in the form of ownership of the financed vehicle assets.
The Fund’s subordinated loan will strengthen Mogo Kenya’s balance sheet and help “crowd-in” more senior debt funding to further grow its balance sheet. The Fund was attracted by Mogo Kenya’s business model aligned with the Fund’s mission to use its funding to empower “bottom-of-the-pyramid” clients while benefiting from fundamental credit risk mitigants.
In addition, the Fund has completed a $9m investment in LOLC Africa.
The investment, structured as a holding company loan in LOLC Africa’s holding company, will be invested in the lending subsidiaries in Zambia, Egypt, Kenya, Tanzania, Nigeria, Malawi, Zimbabwe, Ghana, and the Democratic Republic of Congo. LOLC, which was founded in 1980 in Sri Lanka, entered the African continent in 2018. Verdant Capital Hybrid Fund is the first external investor in the Africa operation.
The investment will help expand LOLC Africa’s footprint of micro, small and medium enterprises (MSMEs) financing in Africa.
In addition, LOLC Africa is expected to benefit from initiatives supported by the Fund’s technical assistance facility.
LOLC is one of the best-performing global microfinance groups, and the investment is in line with the Fund’s strategy of picking the top performer of each theme or category. Its business model is targeting the “bottom of the pyramid”, including increasing access to MSME financing and customer deposits, thereby driving LOLC’s financial inclusion goal.
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The Fund’s investment will provide LOLC Africa with more funding to support and expand the lending activities of its existing subsidiaries in Africa, which are mainly targeted at micro, small and medium-sized enterprises (MSMEs).
In addition, the investment will strengthen the capital bases of the existing and potentially new subsidiaries in Africa. LOLC’s expansion of the MSME lending model is not only about pursuing its commercial ambition but doing so in a sustainable and socially responsible manner to deliver tangible benefits to those communities at the bottom-of-the-pyramid.
