Creditas buys banking license from Andbank, does a US$50M round extension and acquires Kzas

July 8, 2022
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All the moves are part of founder Sérgio Furio's plan to take the fintech to profitability by 2023.

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In the midst of the startup winter, Creditas decided to outline a plan to take it to profitability by 2023. The strategy includes slowing down hiring, but maintains the intention to continue growing at an accelerated rate, doubling in size each year.

The first step in the plan of the founder and CEO, Sergio Furio, happened this Friday, July 8, with the purchase of the banking license of Andbank Brazil, in a transaction valued at R$500 million, which needs to be approved by regulatory authorities.

"The reason for the acquisition is to have an alternative source of funding," says Furio, in an interview with NeoFeed, stressing that the intention is not to become a digital bank and enter the race for the individual client. "Today we can only raise funds via the capital markets. When approved, we will be able to issue CDBs and LCIs."

The fintech currently has a credit portfolio of R$ 5 billion. And it accesses the capital market to raise funds, structuring debt operations such as FIDCs (receivables investment funds), CRIs (real estate receivables certificates) and FIIs (real estate funds). With the banking license, Furio believes that 20% of the funding can be self-funded. Something like R$ 2 billion in 2023, according to his estimates.

Simultaneously, Creditas is doing a $50 million extension of its Series F round, totaling $310 million, which brings Andbank into the startup's shareholder base. Furio says it has maintained its previous valuation of $4.8 billion in this new funding.

In the previous round, Creditas brought in new shareholders, such as Fidelity Management & Research, the Spanish fund Actyus, and Greentrail Capital. Old investors also participated in the funding, which took place at the end of January this year. Among them are QED Investors, VEF, SoftBank, Kaszek, Lightock, Headline, Wellington Management, and Advent International, through its affiliate Sunley House Capital.

Another move involves the issuance of a $150 million bond, which may be converted into shares in some liquidity event. Andbank and other investors, whose names were not disclosed, have underwritten these bonds. The details and terms were not disclosed.

The additional funds that are coming into Creditas' cash flow will be used to purchase the banking license, as well as to follow up on investments in Voltz, a manufacturer of electric motorcycles, in which the fintech has already invested R$150 million, including capital and debt. The company has just opened a factory in Manaus, which, at full capacity, will be able to produce 15,000 motorcycles per month.

With the sale of the banking license, Andbank, which is a European bank headquartered in Andorra, will focus on private banking and asset management. Present in Brazil since 2011, the institution has R$8 billion of assets under management and will continue acting as a brokerage house.

"We used the license very little and with this operation we will strengthen our private banking operation, opening new offices and investing in teams," says Carlos Aso, Andbank's global CEO, justifying the sale. In the transaction, Creditas may also become a shareholder in Andbank's Brazilian operation.

Creditas' announcement package doesn't stop there. The fintech, which provides credit in three pillars (homes, cars and workers' benefits), is buying Kzas, a real estate finance marketplace, in a transaction involving cash and equity. Founders Roberto Nascimento, Rodrigo Costa and Eduardo Muszkat become partners of Creditas

With the deal, Furio says that Creditas now has a new line of business. "We didn't have a real estate financing product," says the fintech founder. "I will increase the monetization of our customer base." Kzas has relationships with banks, such as Banco do Brasil, Bradesco, Caixa, Itaú, Santander, among others.

Furio adds that Kzas' operation is small and should not contribute, in the short term, to Creditas' results. But he illustrates the transaction with the acquisition of Creditoo, which marked the fintech's entry into consigned credit. "It is now an important business unit and contributes a lot to revenue," says the entrepreneur.

Creditas' move comes amid a crisis affecting large startups that are cutting costs, making layoffs, and adjusting operations to increase runway, jargon that refers to the time the funds raised with investors will last before a new round is required.

Since the end of April, several startups have announced mass layoffs. The list includes companies like QuintoAndar, Facily, Ebanx, VTEX, Mercado Bitcoin, Olist, and so many others. Some of them have already made a second round of cuts, such as the cases of Loft and Kavak.

Creditas has not been immune to this and has made, according to the company, a small adjustment of about 11 people in the facilities area. According to Furio, Creditas' plan is not to lay off people. But he admits that he is slowing down hiring.

"Before, we used to hire 350 people, on average, per month. Now it's an average of 75," says Furio. Currently, Creditas has 4,000 employees and offices in São Paulo, Barueri, Curitiba, Porto Alegre, Recife, Valencia (Spain) and Mexico City, where its only international operation is.

Asked about the crisis in startups and how he is positioning himself, Furio recognizes that the market is very difficult: "You have to focus on execution. That's the name of the game," he says. "I have a plan to take the company to profitability by 2023 based on efficiency and productivity."

Furio adds that on the road to profit, he won't give up following the accelerated growth trajectory of doubling Creditas' size each year. "The transaction to buy the banking license will help us accelerate," Furio says.

In the first six months of 2022, Creditas' revenue reached R$820 million, a 3.2-fold growth compared to the same period last year. The fintech, however, still has losses. In 2021, it was R$ 353 million, up 84% - the data for the first six months of this year was not disclosed.

At the beginning of the year, the company even talked to investment banks to open its capital in the United States. "IPO is on the road map, but this is not an IPO year," says Furio. The market winds have changed. Now, Creditas' plan is to be profitable before taking that step.

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 the midst of the startup winter, Creditas decided to outline a plan to take it to profitability by 2023. The strategy includes slowing down hiring, but maintains the intention to continue growing at an accelerated rate, doubling in size each year.

The first step in the plan of the founder and CEO, Sergio Furio, happened this Friday, July 8, with the purchase of the banking license of Andbank Brazil, in a transaction valued at R$500 million, which needs to be approved by regulatory authorities.

"The reason for the acquisition is to have an alternative source of funding," says Furio, in an interview with NeoFeed, stressing that the intention is not to become a digital bank and enter the race for the individual client. "Today we can only raise funds via the capital markets. When approved, we will be able to issue CDBs and LCIs."

The fintech currently has a credit portfolio of R$ 5 billion. And it accesses the capital market to raise funds, structuring debt operations such as FIDCs (receivables investment funds), CRIs (real estate receivables certificates) and FIIs (real estate funds). With the banking license, Furio believes that 20% of the funding can be self-funded. Something like R$ 2 billion in 2023, according to his estimates.

Simultaneously, Creditas is doing a $50 million extension of its Series F round, totaling $310 million, which brings Andbank into the startup's shareholder base. Furio says it has maintained its previous valuation of $4.8 billion in this new funding.

In the previous round, Creditas brought in new shareholders, such as Fidelity Management & Research, the Spanish fund Actyus, and Greentrail Capital. Old investors also participated in the funding, which took place at the end of January this year. Among them are QED Investors, VEF, SoftBank, Kaszek, Lightock, Headline, Wellington Management, and Advent International, through its affiliate Sunley House Capital.

Another move involves the issuance of a $150 million bond, which may be converted into shares in some liquidity event. Andbank and other investors, whose names were not disclosed, have underwritten these bonds. The details and terms were not disclosed.

The additional funds that are coming into Creditas' cash flow will be used to purchase the banking license, as well as to follow up on investments in Voltz, a manufacturer of electric motorcycles, in which the fintech has already invested R$150 million, including capital and debt. The company has just opened a factory in Manaus, which, at full capacity, will be able to produce 15,000 motorcycles per month.

With the sale of the banking license, Andbank, which is a European bank headquartered in Andorra, will focus on private banking and asset management. Present in Brazil since 2011, the institution has R$8 billion of assets under management and will continue acting as a brokerage house.

"We used the license very little and with this operation we will strengthen our private banking operation, opening new offices and investing in teams," says Carlos Aso, Andbank's global CEO, justifying the sale. In the transaction, Creditas may also become a shareholder in Andbank's Brazilian operation.

Creditas' announcement package doesn't stop there. The fintech, which provides credit in three pillars (homes, cars and workers' benefits), is buying Kzas, a real estate finance marketplace, in a transaction involving cash and equity. Founders Roberto Nascimento, Rodrigo Costa and Eduardo Muszkat become partners of Creditas

With the deal, Furio says that Creditas now has a new line of business. "We didn't have a real estate financing product," says the fintech founder. "I will increase the monetization of our customer base." Kzas has relationships with banks, such as Banco do Brasil, Bradesco, Caixa, Itaú, Santander, among others.

Furio adds that Kzas' operation is small and should not contribute, in the short term, to Creditas' results. But he illustrates the transaction with the acquisition of Creditoo, which marked the fintech's entry into consigned credit. "It is now an important business unit and contributes a lot to revenue," says the entrepreneur.

Creditas' move comes amid a crisis affecting large startups that are cutting costs, making layoffs, and adjusting operations to increase runway, jargon that refers to the time the funds raised with investors will last before a new round is required.

Since the end of April, several startups have announced mass layoffs. The list includes companies like QuintoAndar, Facily, Ebanx, VTEX, Mercado Bitcoin, Olist, and so many others. Some of them have already made a second round of cuts, such as the cases of Loft and Kavak.

Creditas has not been immune to this and has made, according to the company, a small adjustment of about 11 people in the facilities area. According to Furio, Creditas' plan is not to lay off people. But he admits that he is slowing down hiring.

"Before, we used to hire 350 people, on average, per month. Now it's an average of 75," says Furio. Currently, Creditas has 4,000 employees and offices in São Paulo, Barueri, Curitiba, Porto Alegre, Recife, Valencia (Spain) and Mexico City, where its only international operation is.

Asked about the crisis in startups and how he is positioning himself, Furio recognizes that the market is very difficult: "You have to focus on execution. That's the name of the game," he says. "I have a plan to take the company to profitability by 2023 based on efficiency and productivity."

Furio adds that on the road to profit, he won't give up following the accelerated growth trajectory of doubling Creditas' size each year. "The transaction to buy the banking license will help us accelerate," Furio says.

In the first six months of 2022, Creditas' revenue reached R$820 million, a 3.2-fold growth compared to the same period last year. The fintech, however, still has losses. In 2021, it was R$ 353 million, up 84% - the data for the first six months of this year was not disclosed.

At the beginning of the year, the company even talked to investment banks to open its capital in the United States. "IPO is on the road map, but this is not an IPO year," says Furio. The market winds have changed. Now, Creditas' plan is to be profitable before taking that step.

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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