This development which is tipped to trigger the unlocking of further investments valued at around USD 4.5 Mn from commercial investors, is expected to go some way towards bolstering the finances of the fintech enterprise. It will also fund loans from the startup’s alternative lender clients across Africa to small and micro enterprises, as well as low-income consumer borrowers.
Lendable is a debt platform designed specifically for African alternative lenders – non-banking, asset-backed finance providers operating in microfinance, as well as a number of other Pay-As-You-Go (PayGo) services. The platform leverages capital from experienced international debt investors from North America and Europe, including family offices, alternative investment fund managers, high net-worth individuals, banks, and impact funds.
Since its inception in 2014, Lendable can be considered to have gradually built a reputation for itself in the area of providing structured finance facilities to a number of African markets. The company is known to currently offer these facilities to seven fast-growing alternative lenders within the continent, with off-grid energy companies, small and medium enterprises (SMEs), lenders and asset finance companies making up the most of its roster of current beneficiaries.
The convertible grant is being provided by the FMO-managed MASSIF Fund; an initiative from the Dutch government. The grant is aimed at reaching targeted end-beneficiaries through the financing of local financial intermediaries and institutions that can enhance their development and growth.
“The ability to harness cutting-edge technology is key to unlocking alternative lending channels in African markets and reducing the financial exclusion of smaller enterprises, which is exactly what Lendable’s proprietary platform and securitization capabilities offer,” Martin Steindl, Manager FMO MASSIF Convertible Grant Programme, is quoted as saying in press release issued to WeeTracker.
By catalyzing innovative, technology-driven business models – a move that is largely motivated by the adoption of novel technologies like the Internet-of-Things (IoT) and mobile technologies by some of the continent’s alternative lenders – the FMO grant seems well-placed to contribute its own quota towards fostering financial inclusion in Africa. This should stir improvements in access to income-generating assets for low-in households whilst unlocking new financial services.
With that in mind, Lendable seems poised to deliver on account of its “Maestro” technology platform which allows for direct data integration with these alternative lenders. Loan portfolio data analysis and cash flow predictions are also incorporated into this technology.
The Maestro technology platform from Lendable also has provisions which allow alternative and investors in the company’s SPVs to access high-quality portfolio management information; a feature that is becoming increasingly popular with investors who have struggled with the traditional methods of getting information on detailed pricing, as well as risk and portfolio quality metrics from impact-focused lenders.
“By working with FMO, we can scale-up the volume of capital reaching SMEs and consumers in our markets as well as to support our partners in implementing the Responsible Finance Guidelines. As we scale, finding parties like FMO that are willing to invest alongside Lendable to de-risk commercial investment is key to our success, “ said Daniel Goldfarb, Co-Founder and CEO of Lendable, as culled from the aforementioned press release.
FMO and Lendable both put pen to paper on the Responsible Finance Guidelines in June 2018. In addition to the grant, both parties will also collaborate in responsible lending market capacity-building initiatives. These are expected to include such functions as educational programs and workshops in parts of Eastern and Western Africa.