Verdant Capital (www.Verdant-Cap.com) is pleased to announce that its Verdant Capital Hybrid Fund (the "Fund") has made its first investment in Watu Credit Uganda Limited ("Watu").
The $7 million investment will help Watu expand its two-wheeler financing footprint across the country.
This represents an important milestone for Watu in Uganda, its second largest market after Kenya, where the business was first established in 2015.
In addition, Watu is expected to benefit from initiatives supported by the Fund's technical assistance mechanism.
Watu is one of Uganda's leading asset finance companies, specifically for two-wheelers.
The business model accommodates and creates opportunities for the unbanked and financially underserved population.
Watu's operations are supported by strong use of technology, including automated processes, GPS tracking tools for motorcycles, and exclusive use of digital payments through mobile money wallets.
The Fund's investment will provide Watu with more capital to finance motorcycle taxis in Uganda.
These bikes are usually the main source of income for motorcyclists.
Watu's business model provides an affordable pathway for motorcyclists to financial stability, the ability to participate in the economy and, in many cases, the first opportunity for tangible wealth in the form of motorcycle ownership.
The Fund's subordinated debt investment will strengthen Watu's balance sheet and help “attract” more senior debt funds to further grow its balance sheet.
The Fund was attracted to Watu's business model aligned with the Fund's mission to use its capital to empower “bottom of the pyramid” clients, while benefiting from fundamental credit risk mitigants.
The Verdant Capital Hybrid Fund is a $100 million fund (final closing target).
The Fund aims for high development impact, including job creation and income generation through SMEs and micro-enterprises.
The Fund is investing hybrid equity and subordinated debt instruments in inclusive financial institutions on a pan-African basis.
The Fund is aimed at specialized banks, microfinance institutions, leasing and factoring companies, fintech and other non-bank financial institutions.
A strong focus will be ensuring that investments meet high environmental and social standards.