South African digital-commerce company Yoco Technologies (Pty) Ltd. has secured a $100 million credit facility from Victory Park Capital Advisors LLC to support its network of merchants. The company, which is backed by private equity giant TPG Inc., provides card terminals to small businesses and will use the money for finance and cash advances to its customers, according to Chief Executive Officer Carsten Höltkemeyer.
The transaction with Victory Park, which manages about $3.6 billion in assets and has invested more than $12 billion across 260 investments since 2007, marks Yoco's first foray into the debt market. Höltkemeyer said the deal will give Yoco direct control over the financing needs of its merchants at scale. Advances will range from 2,000 rand to 1.5 million rand, with merchants using the money to hire staff, buy stock, upgrade equipment or open new branches. Yoco has already disbursed 6.5 billion rand ($394 million) to merchants through partners.
The deal signals that global investors still have an appetite for large bets on Africa's rapidly scaling fintech economy. Yoco previously raised more than $150 million in equity from backers including TPG and Dragoneer Investment Group LLC. Private-debt facilities have become increasingly important funding sources for Africa's maturing technology companies, as small businesses in Africa's biggest economy face a funding gap of about 350 billion rand ($21.2 billion), according to a report by aggregator Finfind.
Yoco, which began operating in 2015 in Cape Town, has expanded from selling affordable point-of-sale devices to offering a payments platform that now runs on an artificial intelligence operating system. Merchants can be pre-approved for advances based on live sales data, with funding deposited instantly and repaid through automatic deductions from daily sales. The company now processes payments for 200,000 merchants from 30 million consumers a year and has handled more than $15 billion in payments to date.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing