Investment banking and asset management firm Verdant Capital has struck the debut transaction through its Verdant Capital Hybrid Fund, by investing $7 million in Watu Credit Uganda.
The money will help Watu expand its footprint of two-wheeler financing throughout the country. This represents an important milestone for Watu in Uganda, it’s second largest market after Kenya, where the business was first established in 2015.
Watu is one of Uganda’s leading asset financing companies, specifically for two-wheelers. The 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 says it has provided over 380,000 loans across seven countries and has impacted the lives of more than 2 million people so far.
Verdant’s fund is pitching in with subordinated debt investment to strengthen Watu’s balance sheet and help “crowd-in” more senior debt funding to further grow its balance sheet.
The Verdant Capital Hybrid Fund is targeting $100 million corpus and will invest hybrid capital and subordinated debt instruments into inclusive financial institutions on a pan-African basis. The fund is targeting specialist banks, microfinance institutions, leasing and factoring companies, fintech and other non-bank financial institutions.
It had hit first close in December in partnership with anchor investor KfW of Germany to invest in micro, small and medium-sized enterprises (MSMEs) in Africa.
KfW Development Bank, on behalf of the German Federal Ministry for Economic Cooperation and Development, is contributing about $34 million to the fund.
The new fund is domiciled in Germany, but most of its investment team is based in Verdant Capital’s offices across Africa. It is targeting two further closings with a final amount of $100 million.