Verdant Capital raises USD 9.9 M Series A equity capital for Tugende, a leading technology enabled MSME lender in East Africa
The transaction is the most recent for the award winning fintech and financial inclusion investment banking franchise of Verdant Capital. Partech Africa, a member of the Partech Group, a leading global technology venture capital fund, and Enza Capital invested in the USD 3.6 million extension round – agreed and structured in 2020 – bringing the total Series A volume to USD 9.9 million.
This adds to the first close which was led by Mobility 54, the Africa-focused venture capital entity backed by the Toyota Group as well as USD 12 million of debt financing raised over the last 18 months, through institutional investors from the UK, Germany, Switzerland, the Netherlands and South Africa. Verdant Capital serves as Tugende’s financial advisor and arranger for its equity and debt capital raises.
The MSME credit gap across sub-Saharan Africa amounts to more than USD 331 billion per year, with a gap of USD 37 billion in East Africa alone. The growth of innovative and technology enabled business models, such as Tugende’s, are helping fill the credit gap left by traditional banks.
The capital raises for Tugende strengthen its balance sheet and allow the expansion of its loan portfolio. Having built its leading position financing boda bodas (motorcycle taxis) in Uganda, Tugende launched its Kenyan operations in late 2019, kick-starting its regional expansion, while continuing to add new asset products for other types of informal sector clients. The equity investments and partnerships with leading equity firms will also accelerate Tugende’s technology development and organisational growth.
Tugende uses asset finance, technology, and a high touch customer support model to help micro, small and medium enterprises (MSMEs) own income-generating assets. Tugende has served over 43,000 clients with more than 16,000 having achieved ownership of at least one asset.
Its core asset finance packages include medical and life insurance, training, safety equipment and digital credit profiles in addition to affordable asset finance. Tugende has broadened the productive assets it finances to include fishing boat engines, cars, refrigerators and other income generating equipment and is also currently piloting financing for e-mobility assets. All payments are digital and Tugende provides proprietary credit scores automatically to all clients to help them monitor their performance and unlock new opportunities like discounts and new products.