The transaction is the most recent for the award winning fintech and financial inclusion investment banking franchise of Verdant Capital. Partech Africa, a member of the Partech Group, a leading global technology venture capital fund, and Enza Capital invested in the USD 3.6 million extension round – agreed and structured in 2020 – bringing the total Series A volume to USD 9.9 million. This adds to the first close which was led by Mobility 54, the Africa-focused venture capital entity backed by the Toyota Group as well as USD 12 million of debt financing raised over the last 18 months, through institutional investors from the UK, Germany, Switzerland, the Netherlands and South Africa. Verdant Capital serves as Tugende’s financial advisor and arranger for its equity and debt capital raises.
The MSME credit gap across sub-Saharan Africa amounts to more than USD 331 billion per year, with a gap of USD 37 billion in East Africa alone. The growth of innovative and technology enabled business models, such as Tugende’s, are helping fill the credit gap left by traditional banks. The capital raises for Tugende strengthen its balance sheet and allow the expansion of its loan portfolio. Having built its leading position financing boda bodas (motorcycle taxis) in Uganda, Tugende launched its Kenyan operations in late 2019, kick-starting its regional expansion, while continuing to add new asset products for other types of informal sector clients. The equity investments and partnerships with leading equity firms will also accelerate Tugende’s technology development and organisational growth.
Tugende uses asset finance, technology, and a high touch customer support model to help micro, small and medium enterprises (MSMEs) own income-generating assets. Tugende has served over 43,000 clients with more than 16,000 having achieved ownership of at least one asset. Its core asset finance packages include medical and life insurance, training, safety equipment and digital credit profiles in addition to affordable asset finance. Tugende has broadened the productive assets it finances to include fishing boat engines, cars, refrigerators and other income generating equipment and is also currently piloting financing for e-mobility assets. All payments are digital and Tugende provides proprietary credit scores automatically to all clients to help them monitor their performance and unlock new opportunities like discounts and new products.
Tugende’s Series A transaction cements Verdant Capital’s track record in raising capital for high impact emerging financial technology leaders and bringing these businesses to a broad range of global investors. In recognition of Verdant Capital’s strong capital raising volumes in the last 12 months across East, West and South Africa, Verdant Capital was awarded Best Fintech Capital Raising Team in Africa, by cfi.co in its Q1 2021 business and finance awards. In the recent cfi.co awards, ESG and impact investing themes were writ large with BBVA and Credit Mutual, from Spain and France, respectively, winning accolades for Responsible Investment Management and Neuberger Berman’s award for its North American ESG investment platform.
Verdant Capital won the award following a period of record deal volumes in Africa, with some USD 500 million of capital raising and M&A in the Fintech sector in 2020. Verdant Capital successfully completed transactions in the sector with a total value of USD 40 million in 2020. The capital raises included businesses such as Tugende, Retail Capital, a South African SME-credit tech player, and Planet42, a South African car-subscription business. Based on the growth in its own pipeline, Verdant Capital expects sector-wide deal volumes in 2021 to exceed the levels set in 2020.
Verdant Capital’s ability to showcase its clients to a global audience is further enhanced by its proprietary annual global investor conference, Video Africa. The second edition hosted in March was attended by 45 leading specialist investors from 22 countries, showcasing 18 of the firm’s leading fintech and financial services clients from across Africa.