MICROCAPITAL BRIEF: In first disbursement, Verdant Capital Hybrid Fund lends $7 million to Watu Credit Uganda to expand vehicle financing

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Verdant Capital, a Mauritius-based corporate finance company, recently issued subordinated debt in the amount of $7 million to Watu Credit Uganda, a subsidiary of Kenyan Watu Credit, which finances vehicles and mobile phones in six African countries. While Watu also finances smartphones, tuk tuks (three-wheelers) and cars, Verdant’s investment is specifically aimed at financing boda bodas (motorbike taxis) in Uganda.

In June 2021, Watu Uganda reported 12-month profits of UGX 5.8 billion (USD 1.5 million) on total assets of UGX 59 billion (USD 15 million). Among the company’s backers is Mintos, a Latvia-based peer-to-peer platform. Watu Uganda was founded in 2019.

Founded in 2015, Watu is a financial technology (fintech) company that mainly finances two- and three-wheeled vehicles in Kenya, Nigeria, Rwanda, Sierra Leone, Tanzania and Uganda. Its products include: (1) 12-month loans for mobile phones; (2) car loans with a 20% down payment and terms of six months to five years; and (3) loans for tuk tuks and boda bodas with terms up to two years and installments starting at KES 20,000 (USD 170). All of the company’s auto loans come with insurance.

The Verdant Capital Hybrid Fund loan is the fund’s first disbursement. The fund has a volume of 80 million dollars that it invests in inclusive finance institutions. These investments take the form of subordinated debt and “hybrid” capital – that which serves as an “intermediate level of capital that can be tapped into by local and international senior debt investors”. The agreement with Watu also includes support from the Hybrid Fund’s technical assistance team.

Verdant Capital, a corporate finance firm operating from offices in Ghana, Mauritius and South Africa, provides advisory services in capital raising as well as mergers and acquisitions to clients across the Africa. These customers span agro-industry, renewable energy, business services, financial services and manufacturing industries.

By Nithin Naren, Research Associate

Sources and additional resources

Leafy press release
https://verdant-cap.com/verdant-capital-hybrid-fund-completes-its-first-investment-in-watu-credit-uganda-limited/

Description of Watu
https://watuafrica.com/about-watu/

Financial statements of Watu Uganda, hosted by Mintos
https://assets.mintos.com/84E48B11-8FBC-9005-808A-F18970C48C53.pdf

Previous article by MicroCapital on Verdant
https://www.microcapital.org/microcapital-brief-verdant-capital-arranges-3m-revolving-credit-facility-for-zambias-pan-african-building-society-pabs/

Did you know that MicroCapital publishes the MicroCapital Monitor every month? Learn more at https://www.microcapital.org/products-page/.

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