Uganda deal for Verdant Capital Hybrid Fund
Verdant Capital has announced that its Verdant Capital Hybrid Fund made its first investment, in Watu Credit Uganda Limited. The investment of $7 million will help Watu expand its footprint of two-wheeler financing throughout the country. This represents an important milestone for Watu in Uganda, its second largest market after Kenya, where the business was first established in 2015. In addition, Watu is expected to benefit from initiatives supported by the fund’s technical assistance facility.
The fund is targeting high developmental impact, including job creation and income generation through SMEs and micro-entrepreneurship.
Watu is one of Uganda’s leading asset financing companies, specifically for two-wheelers. The business model accommodates and creates opportunities for the unbanked and financially underserved population. Watu’s operations are backed by the strong use of technology, including automated processes, GPS tracking tools for the motorbikes and the exclusive use of digital payments via mobile money wallets.
The fund’s investment will provide Watu with more capital to finance motorbike taxis across Uganda. These motorbikes are usually the principal source of income for the riders. Watu’s business model provides an affordable route for riders to attain financial stability, the ability to participate in the economy and, in many cases, the first opportunity to have tangible wealth in the form of ownership of a motorbike. The fund’s subordinated debt investment will strengthen Watu’s balance sheet and help crowd-in more senior debt funding to further grow its balance sheet. The fund was attracted by Watu’s business model aligned with the fund’s mission to use its capital to empower base-of-the-pyramid clients, while benefiting from fundamental credit risk mitigants.
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