Fintech firms in Latin America are having a moment with the equity investing titans of the world, and debt investors are taking note.
have boosted their equity investments in the region over the past six to 12 months, according to multiple industry sources. Strong equity backing, in turn, is attracting debt capital.
“What we are seeing in, say, Mexico … is very different from a few years ago,” said James Sagan, managing partner at fintech investorWhile 2018 was a record investment year, the trend has accelerated this year. In March, SoftBank, the Japanese conglomerate, launched a $5 billion fund devoted solely to tech investments in LatAm companies, including fintechs.
Because there is less investing competition in Latin America than in the US, debt providers are still able to snag double digit returns investing in online consumer and SME lenders, according to both Watson and Sagan. That’s compared to 6%-7% returns from similar investments in US lenders. Sagan’s Arc Labs — which recently pivoted to primarily investing in LatAm fintechs — is close to closing on three or four debt deals in Mexico, and one more in Brazil.
The lender is on the lookout for a Series B equity funding round to expand its platform to other LatAm countries, Flores said., plans to raise $5 million in equity and “some debt capital” by early next year to offer additional products, according to CEO Gerardo Obregón.
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