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Brazilian Fintech Open Co acquires BoletoFlex and moves into digital lending

December 15, 2022
Por
Moacir Drska
Moacir Drska
Journalist NeoFeed
📷
NeoFeed
Result of the merger between Geru and Rebel, the company buys BoletoFlex, a startup from Santa Catarina specialized in digital credit and with a network of more than 100 store partners, such as Ame Digital, Multi, Mobly and CVC
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In March 2021, Geru and Rebel merged their operations to create Open Co, an unsecured personal loan fintech that was born with 100,000 active customers. Now, about to complete two years of the merger, the company is incorporating a new brand to add new elements to this equation.

The company announced this Thursday, December 15, the purchase of BoletoFlex, a startup from Santa Catarina that specializes in the Buy Now Pay Later (BNPL) model, the digital version of the "old" payday loans popularized in Brazil by chains such as Casas Bahia, and that has been attracting the attention of companies in Brazil and abroad.

The agreement, the first acquisition in the fintech's trajectory, was anticipated exclusively to NeoFeed. With the transaction, which involved an exchange of shares. Célio Ikeda, Pedro Noll, Carlos Nakazawa and Leandro Machado, the four partners of BoletoFlex, become shareholders of Open Co. The company did not reveal the startup's valuation in the negotiation.

"We saw in BoletoFlex the opportunity to consolidate the work we had been doing on Buy Now Pay Later," Sandro Reiss, co-founder of Open Co, tells NeoFeed. "They have a strong team and had been doing this for the longest time. With this acquisition, we're going to take a couple of steps at once."

On that path, the company will incorporate 100% of BoletoFlex's team. Founded in 2019 and based in Florianopolis (SC), the startup has about 20 employees, especially in areas such as technology and data science. The Open Co team, in turn, has approximately 250 professionals.

The BoletoFlex model allows the consumer to make online purchases without the need for a credit card. To this end, the company maintains partnerships with brands and retailers, and is integrated to these companies' channels, be they physical or digital stores, or even telesales operations.

It is in this network developed by BoletoFlex that Open Co sees one of the great reasons for the acquisition. Currently, the startup has more than 100 partners, in a portfolio composed of names such as Ame Digital, Multi (ex-Multilaser), Mobly, CVC, Atrio and Positivo.

Open Co's current base in the Buy Now Pay Later space includes approximately 20 partners, including MadeiraMadeira, a unicorn startup that owns a furniture and homeware platform. With the arrival of BoletoFlex, the goal is to reach 1,500 partners by 2025.

"The fact that it is the only product in the portfolio has made them scale a lot on this front," explains Rodrigo Bruni, head of B2B at Open Co. "We were not in a lot of these partners and we will gain a relevant portfolio increase to become a reference in this space."

   BoletoFlex's partner network consists of more than 100 partners and names such as Multi, Ame Digital, CVC and Mobly

By taking a digital store bath into the lender, the BNPL market will move $125 billion globally by 2021, according to Precedence Research. Until 2030, the consultancy projects a compound annual growth of 43.8%, in the segment and a revenue of US$ 3.2 trillion at the end of that period.

Today, this market includes names that were born under this model, such as the American Affirm and the Swedish Klarna. Both companies, however, have been facing difficulties, due to the effects of the macroeconomic scenario and the corrections that are affecting technology companies.

At the same time, the NPLB segment has already attracted industry giants such as Amazon and PayPal. The most recent sign came from Apple that, in June this year, announced the launch of Apple Pay Later, a service that is its bet on this format.

In Brazil, Open Co will also compete with large companies, such as Via, owner of Casas Bahia, and Midway, a finance company of the Guararapes group, controller of Riachuelo, which are already developing solutions under this concept.

Another rival is the Colombian company Addi, which arrived in Brazil in March of this year and has already raised a total of US$ 376 million in resources, between investments and debt operations, with companies such as Andreessen Horowitz, Goldman Sachs, and Softbank.

Gateway

Open Co is a newcomer in this dispute, and has other lines in its portfolio. The company's flagship product is personal loans, with credit ranging from R$ 1 thousand to R$ 50 thousand, in up to 36 installments and with customized rates starting at 1.9% per month. The fintech sees, however, an important role for BNPL in this scope.

"There are several journeys in which we can have a point of contact with a customer, but the moment of financing the consumption of a good is a very positive moment in the consumer's life," says Reiss. "So BNPL is a gateway to our ecosystem that we're going to encourage."

Open Co has already served more than 7 million customers and has accumulated a volume of more than R$3 billion in granted credits. To continue financing these operations, the most recent fundraising, in November, involved a R$200 million Receivables Investment Fund (FIDC).

Open Co has already served more than 7 million customers and accumulates a volume of more than R$ 3 billion in granted credits

Previously, the company had already raised a FIDC of R$ 1.5 billion, in April 2021. Despite this volume of resources, in 2022 the company's plans were affected by the macroeconomic scenario, the increase in the cost of capital, the rise in interest rates and, consequently, by default.

While not revealing the levels of default in Open Co's portfolio, Reiss notes that they are worse than the historical averages for the operation, but still performing "better than the market average".

"Unlike what we had planned, we chose to grow our loan portfolio less this year," he says. "So we decided to look more in-house and continue investing in the team, in technology, in products and channels."

This strategy was supported by a R$600 million investment, led by Softbank and raised in December 2021. Now, after closing its first acquisition, the company does not rule out adding new pieces to its M&As wake.

"We don't have a deliberate, grand plan for inorganic expansion. Our focus is on building our experiences in-house," says Reiss. "But we've been having a lot of conversations, and if someone is doing something we want, ahead of us or in a different way, we'll evaluate the opportunity."
Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

In March 2021, Geru and Rebel merged their operations to create Open Co, an unsecured personal loan fintech that was born with 100,000 active customers. Now, about to complete two years of the merger, the company is incorporating a new brand to add new elements to this equation.

The company announced this Thursday, December 15, the purchase of BoletoFlex, a startup from Santa Catarina that specializes in the Buy Now Pay Later (BNPL) model, the digital version of the "old" payday loans popularized in Brazil by chains such as Casas Bahia, and that has been attracting the attention of companies in Brazil and abroad.

The agreement, the first acquisition in the fintech's trajectory, was anticipated exclusively to NeoFeed. With the transaction, which involved an exchange of shares. Célio Ikeda, Pedro Noll, Carlos Nakazawa and Leandro Machado, the four partners of BoletoFlex, become shareholders of Open Co. The company did not reveal the startup's valuation in the negotiation.

"We saw in BoletoFlex the opportunity to consolidate the work we had been doing on Buy Now Pay Later," Sandro Reiss, co-founder of Open Co, tells NeoFeed. "They have a strong team and had been doing this for the longest time. With this acquisition, we're going to take a couple of steps at once."

On that path, the company will incorporate 100% of BoletoFlex's team. Founded in 2019 and based in Florianopolis (SC), the startup has about 20 employees, especially in areas such as technology and data science. The Open Co team, in turn, has approximately 250 professionals.

The BoletoFlex model allows the consumer to make online purchases without the need for a credit card. To this end, the company maintains partnerships with brands and retailers, and is integrated to these companies' channels, be they physical or digital stores, or even telesales operations.

It is in this network developed by BoletoFlex that Open Co sees one of the great reasons for the acquisition. Currently, the startup has more than 100 partners, in a portfolio composed of names such as Ame Digital, Multi (ex-Multilaser), Mobly, CVC, Atrio and Positivo.

Open Co's current base in the Buy Now Pay Later space includes approximately 20 partners, including MadeiraMadeira, a unicorn startup that owns a furniture and homeware platform. With the arrival of BoletoFlex, the goal is to reach 1,500 partners by 2025.

"The fact that it is the only product in the portfolio has made them scale a lot on this front," explains Rodrigo Bruni, head of B2B at Open Co. "We were not in a lot of these partners and we will gain a relevant portfolio increase to become a reference in this space."

   BoletoFlex's partner network consists of more than 100 partners and names such as Multi, Ame Digital, CVC and Mobly

By taking a digital store bath into the lender, the BNPL market will move $125 billion globally by 2021, according to Precedence Research. Until 2030, the consultancy projects a compound annual growth of 43.8%, in the segment and a revenue of US$ 3.2 trillion at the end of that period.

Today, this market includes names that were born under this model, such as the American Affirm and the Swedish Klarna. Both companies, however, have been facing difficulties, due to the effects of the macroeconomic scenario and the corrections that are affecting technology companies.

At the same time, the NPLB segment has already attracted industry giants such as Amazon and PayPal. The most recent sign came from Apple that, in June this year, announced the launch of Apple Pay Later, a service that is its bet on this format.

In Brazil, Open Co will also compete with large companies, such as Via, owner of Casas Bahia, and Midway, a finance company of the Guararapes group, controller of Riachuelo, which are already developing solutions under this concept.

Another rival is the Colombian company Addi, which arrived in Brazil in March of this year and has already raised a total of US$ 376 million in resources, between investments and debt operations, with companies such as Andreessen Horowitz, Goldman Sachs, and Softbank.

Gateway

Open Co is a newcomer in this dispute, and has other lines in its portfolio. The company's flagship product is personal loans, with credit ranging from R$ 1 thousand to R$ 50 thousand, in up to 36 installments and with customized rates starting at 1.9% per month. The fintech sees, however, an important role for BNPL in this scope.

"There are several journeys in which we can have a point of contact with a customer, but the moment of financing the consumption of a good is a very positive moment in the consumer's life," says Reiss. "So BNPL is a gateway to our ecosystem that we're going to encourage."

Open Co has already served more than 7 million customers and has accumulated a volume of more than R$3 billion in granted credits. To continue financing these operations, the most recent fundraising, in November, involved a R$200 million Receivables Investment Fund (FIDC).

Open Co has already served more than 7 million customers and accumulates a volume of more than R$ 3 billion in granted credits

Previously, the company had already raised a FIDC of R$ 1.5 billion, in April 2021. Despite this volume of resources, in 2022 the company's plans were affected by the macroeconomic scenario, the increase in the cost of capital, the rise in interest rates and, consequently, by default.

While not revealing the levels of default in Open Co's portfolio, Reiss notes that they are worse than the historical averages for the operation, but still performing "better than the market average".

"Unlike what we had planned, we chose to grow our loan portfolio less this year," he says. "So we decided to look more in-house and continue investing in the team, in technology, in products and channels."

This strategy was supported by a R$600 million investment, led by Softbank and raised in December 2021. Now, after closing its first acquisition, the company does not rule out adding new pieces to its M&As wake.

"We don't have a deliberate, grand plan for inorganic expansion. Our focus is on building our experiences in-house," says Reiss. "But we've been having a lot of conversations, and if someone is doing something we want, ahead of us or in a different way, we'll evaluate the opportunity."
Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.

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