MercadoLibre Inc. (NASDAQ: MELI) plans on expanding the credit offering of its fintech arm in two key markets. To do this, the Argentina-based e-commerce giant has secured $233 million in private financing from Goldman Sachs Group.
The loan was secured though MercadoLibre’s credit unit Mercado Crédito. Of this $233 million loan, fintech arm MercadoPago will use $106 million to expand the lending capacity targeted at individuals and small- and medium-sized enterprises in Brazil, while $127 million has been earmarked for Mexico.
“At Mercado Pago we are driven by the purpose of bringing solutions and generating more opportunities for millions of Latin Americans, through an innovative credit offer that is adapted to their needs and capabilities,” said Facundo Cuppi, director of lending strategy & operations at Mercado Crédito, in a news release announcing the loan. “Goldman Sachs’ investment encourages us to continue working so that thousands of people, small businesses, and SMEs can unleash their full potential.”
Santiago Rubin, managing director, head of technology media and telecom for Latin America at Goldman Sachs, added in the release: “We are extremely excited to continue partnering with MercadoLibre to promote financial inclusion and access to credit in Latin America. Mercado Crédito and the whole MercadoLibre ecosystem are a unique platform to improve capital flow for companies that have not had access to credit through conventional means.”
Through available MercadoPago credits in the region, more than $7.55 million have already been lent, in 175 million consumer credits and working capital loans for SMEs.
MercadoLibre is the fourth-largest constituent in the Next Frontier Internet & Ecommerce ETF (FMQQ ), representing roughly 7.55% of the fund’s portfolio as of July 22. The fund skews investors to more under-penetrated e-commerce and internet markets in emerging markets.
“Mercado’s fintech arm has become the real gem of the business. Payments, small consumer loans, insurance, crypto, it does it all,” said EMQQ Global and CIO Kevin T. Carter. “It’s built quite an expansive and sticky ecosystem.”
FMQQ, which debuted last September, seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the Next Frontier Internet and Ecommerce Index (FMQQetf.com). The fund is designed to provide investors with exposure to the internet and e-commerce sectors of the developing world and holds over 60 companies operating in emerging and frontier markets.
FMQQ features exposure to 17 countries, not including China. Securities must meet a minimum of a $300 million market cap and pass a liquidity screen that requires a $1 million average daily turnover.
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