Dow Today – Fidelity Buys Stake in Creditas Valuing Startup at $4.8 Billion
(Bloomberg) — Fidelity Investments led a funding round for Brazilian digital lender Creditas in a private fundraising that valued the firm at $4.8 billion, making it one of Latin America’s most valuable financial upstarts.
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Creditas raised $260 million in a Series F financing round led by Fidelity, said Sergio Furio, founder and Chief Executive Officer of the Sao Paulo-based lender. Other existing investors, such as SoftBank Group Corp.’s Vision and Latin America funds, also took part, Furio said.
“Markets were getting a bit weird and we wanted to be well capitalized,” Furio said in a video interview. He said that he hopes volatility will yield new acquisition opportunities.
Proceeds from the round will also be used to attract new clients with a goal of doubling revenue in 2022, Furio said. The company is set for a challenging year in Brazil, with economic growth expected to be flat and a polarized presidential election in October.
“Brazilians will have to take on more collateralized loans, as incumbent banks retreat other lines of credit,” Furio said.
Creditas sells a range of secured loans — using homes, vehicles and even iPhones as collateral — offering cheaper rates than traditional banks. In a previous fundraising round in Dec. 2020, the firm was valued at $1.75 billion.
The Creditas transaction kicks off what promises to be another strong year for Latin American startups. Last year, venture capitalists invested over $15 billion in Latin American startups, more than three times what they did in 2020, according to data compiled by PitchBook.
The deal frenzy helped mint new billionaires and turned startups into some of the region’s largest companies. The latest fundraising vaulted Creditas to the region’s top 5 most-valuable privately-held startups, ranking below digital used car reseller Kavak (valued at $8.7 billion), delivery services provider Rappi ($5.25 billion) and real-estate marketplace QuintoAndar ($5.1 billion).
The question now is how those startups will fare when its time to list on public equity markets. Due to the rout in tech stocks globally, Nu Holdings, a Latin America fintech powerhouse that went public last December, is now trading below its IPO price.
Creditas plans on doing an initial public offering at some point, likely in a U.S.-based exchange, according to Furio, but no timing has been set yet.
Furio, who’s from Spain, founded Creditas in 2012, after hearing about Brazil’s astronomical interest rates from his Brazilian girlfriend. He had previously worked at Deutsche Bank’s corporate and investment banking division, followed by a seven-year stint at The Boston Consulting Group, and arrived in Brazil without speaking Portuguese.
Now, the firm he created has over 4,000 employees, with a technology office in Spain and a lending operation in Mexico. Creditas plans on using some of the funding to ramp up growth in Mexico, but there are no plans to expand to other Latin American countries.
With the latest round, Creditas has now raised $829 million through equity transactions, according to Furio. Aside from Fidelity, other new investors include Spanish fintech fund Actyus and Greentrail Capital. The firm is also backed by QED Investors, Kaszek Ventures, Wellington Management and Advent International, via their affiliate Sunley House Capital.
“Creditas is the rare fintech that actually builds deep relationships with their customers, drastically lowering the cost of credit and improving the quality of life of those they serve,” said Will Pruett, a managing director at Fidelity.
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