Kavak signed deals worth $810 million with HSBC, Goldman Sachs and Santander

The agreements gave the Latin American unicorn a US$675 million financing from HSBCthrough a master portfolio sale agreement, in which Kavak makes an assignment of the collection rights regarding the financing that it grants to its clients for the purchase of used vehicles.

In addition, the company received a line of credit for $100 million from Goldman Sachs, and another for $35 million of Santander, resources that will be used in the development of its business model and growth of its inventory, to continue its penetration in the Latin American market.

Kavak’s disruptive business model began the transformation of the industry, minimizing the risk of fraud in transactions, by controlling the processes of buying, selling and repairing cars, in addition to multiplying its growth potential, through the development of a technology that allows populations of diverse credit profiles to access the purchase of a car, even when they had never received credit approval before.

“In Latin America, 40% of pre-owned car transactions register some type of irregularity, increasing the risk of suffering fraud. Under these conditions it is difficult for the institutions to take the risk of financing the units; In Mexico alone, less than 5% of sales receive financing, causing citizens to be unable to increase their purchasing power by not being able to access a car,” he claimed Moses FlowersCFO of Kavak.

With a focus on the needs and experience of its customers, Kavak implemented a series of solutions throughout the buying, reconditioning and selling process, disrupting the used car industry on the continent. Today it successfully operates its innovative business model in the main markets of the region: Mexico, Argentina, Brazil, Chile, Colombia and Peru, in addition to having recently entered the Asian continent with his landing in Turkey

The company’s results convinced the main global venture capital funds, such as Softbank, General Atlantic and Greenoaks, among others, to invest more than US$1.6 billion in 5 financing rounds, and now, financial giants, HSBC, Goldman Sachs and Santander, join the support of the most valuable private startup in Latin America, with a value of more than US$8.7 billion.

“As a result of these agreements, we will be able to strengthen our offer of guaranteed cars in the market, and also invest in the development of an operating model that, in less than two years, and together with our financial allies, has allowed us to offer financing solutions. to a growing number of our clients, thus beginning to break down the barriers that impede the well-being and development of the middle class in the economies where we are present”, Kavak’s CFO stated.

Kavak has made it possible for all people who choose to buy a used car to have access to financing, many of them receiving credit for the first time in their lives. This tool is a clear differentiator, and explains that 40% of Kavak’s operations are people who buy their first car; proof of the company’s ability to provide financial and mobility access.

“The collaboration between HSBC and Kavak will allow both companies to exchange best practices in digital innovation, risk management and global standards, and due to the transformation that this represents for the industry, the Mexican unicorn is laying the foundations for the car market. pre-owned of the future”, he claimed Henry Margin, Executive director of mortgage and automotive credit at HSBC Mexico.

For its part, Samuel Villegas, CEO and President of Goldman Sachs Mexico, indicated that “Kavak’s business model aims to address a critical pain point for many potential car owners, lowering the barriers to entry into the used car financing market. Our credit extension supports the growth opportunity for the company and the fintech sector in Latin America in general.”

Finally, Javier Cosio-CastilloExecutive Director of Financial Solutions of Banco Santander México, added that “Kavak is reinventing the traditional model of buying and selling pre-owned cars in Latin America, and its global vision of generating security and certainty in developing country markets is an objective that we have in common and, therefore, we want to be part of it. of the transformation they represent for the industry.

“In countries like the United States, 7 out of 10 citizens have a car, which contrasts with Latin America, where only 1.5 out of 10 inhabitants have been able to buy a car. This is the reality that we want to transform, and we will not rest until we become a true agent of change that solves the mobility problems of thousands of citizens”, pointed out Moses Flores BotelloCFO of Kavak.

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