MercadoLibre expands Fintech arm with $233 million loan
MercadoLibre Inc. (NASDAQ: MELI) plans to expand the credit offering of its fintech arm in two key markets. To do this, the Argentina-based e-commerce giant has secured $233 million in private funding from Goldman Sachs Group.
The loan was secured through MercadoLibre’s credit unit Mercado Crédito. Of this $233 million loan, fintech arm MercadoPago will use $106 million to expand its lending capacity targeting individuals and small and medium-sized businesses in Brazil, while $127 million is earmarked for Mexico.
“At Mercado Pago, we are driven by the intention to bring solutions and generate more opportunities for millions of Latin Americans, through an innovative credit offer adapted to their needs and abilities,” said Facundo Cuppi, Director of Lending Strategy and Operations at Mercado Crédito, in a press release announcing the loan. “Goldman Sachs’ investment encourages us to continue working to enable thousands of people, small businesses and SMEs to unlock their full potential.”
Santiago Rubin, managing director, head of technology media and telecom for Latin America at Goldman Sachs, added in the release: “We are extremely pleased to continue our partnership with MercadoLibre to promote financial inclusion and access to credit in Latin America. Mercado Crédito and the entire MercadoLibre ecosystem are a unique platform to improve the flow of capital for companies that have not had access to credit through conventional means.”
Through available MercadoPago credits in the region, more than 7.55 million dollars have already been lent, in 175 million consumer credits and working capital loans to SMEs.
MercadoLibre is the fourth largest constituent in Next Frontier Internet & Ecommerce ETF (FMQQ)which represents approximately 7.55% of the fund’s portfolio as at 22 July. The fund skews investors to more underpenetrated e-commerce and internet markets in emerging markets.
“Mercado’s fintech arm has become the real gem of the business. Payments, small consumer loans, insurance, crypto, it does everything,” said EMQQ Global founder and CIO Kevin T. Carter. “It’s built a pretty expansive and sticky ecosystem.”
FMQQ, which debuted last September, seeks to provide investment results that, before fees and expenses, generally match the price and yield of the Next Frontier Internet and Ecommerce Index (FMQQetf.com). The fund is designed to give investors exposure to the internet and e-commerce sectors in developing countries and has over 60 companies operating in emerging and frontier markets.
FMQQ has exposure to 17 countries, not including China. Securities must meet a minimum market capitalization of $300 million and pass a liquidity screen that requires an average daily turnover of $1 million.
For more news, information and strategy, visit the Emerging Markets Channel.
