39749 - Konfio B

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Summary of Investment Information

Project Number

39749

Company Name

Konfio Limited

Date SPI Disclosed

Jun 8, 2017

Country

Mexico

Region

Latin America and the Caribbean

Projected Board Date

Jul 21, 2017

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Aug 19, 2017

Department

TMT, Venture Capital & Funds

Industry

Financial Markets

Previous Events

Approved : Aug 4, 2017
Signed : Aug 11, 2017
Invested : Aug 16, 2017

Sector

Virtual lending, P2P, crowdfunding

Project Description

Konfio (the “Company”) is an online lending platform for Micro, Small and Medium Enterprises (“MSMEs”) in Mexico founded in 2013 to address the lack of credit for the vast creditworthy but underserved entrepreneurial segment in Mexico. Konfio has developed an algorithm to underwrite unsecured working capital loans in a fraction of the time and cost of traditional lenders, at competitive rates but with greater convenience for the customer. IFC is considering a debt and equity investment in Konfio (the “Project”), which will be used to finance the Company’s continued expansion. The Project aligns with IFC’s contribution to the WBG goals by addressing gaps to financial services through the use of financial technology (“FinTech”).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	3.50

Development Impact

Access to finance for MSMEs in Mexico: Konfio contributes to financial inclusion and economic development in Mexico by empowering MSMEs with better access to working capital. Konfio's target clients seek credit online because they cannot afford to take time off from their business to go to the bank for a loan. With its proprietary credit assessment methodology, Konfio can make financing faster, more affordable and convenient for MSMEs who remain vastly underserved by the formal bank credit market which has very restrictive lending policies for this sector.

(i) IFC's regional and sector expertise and presence: Konfio will benefit from IFC's local expertise and knowledge in the FinTech sector, especially in the online lending services segment. IFC's FinTech team has looked at and invested in online lending companies globally (including Kreditech, Moni and Creditas) which it can leverage to help the company grow. IFC can also add expertise with financial service regulation, which should enable the company to better manage its risk. (ii) Network of Financial Institutions and Investors: IFC has extensive relationships in the financial institutions sector across Latin America which would help the Company as it sees potential partnerships.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of $3 million equity and $3 million debt investment to an online lender offering short and medium term working capital loans to formal micro and small enterprises in Mexico. Currently Konfio offers only small unsecured medium term working capital loans but the company is planning to expand its offerings to larger and longer term loans for its repeat customers. The risk of these activities is considered low and as such this project has been classified as category FI-3 according to the IFC Environmental and Social Review Procedure. The client will be required to update its loan management system to adequately manage e&s risks associated with its lending activities and to ensure the latter comply with the IFC Exclusion List and national E&S laws and regulations. Overall, the client was found to be in compliance with PS2 requirements. The client will be required to notify IFC in the case of any change in the nature of its operation and to upgrade its E&S systems if the risk profile of its portfolio increases.

Contacts

For Inquiries About the Project, Contact

IFC
Alicia Ferrer
Senior Investment Officer
+52 55 3098 0157
aferrer1@ifc.org
Torre Reforma, Paseo de la Reforma 483, Piso 18, Col. Cuauhemoc C.P. 06500 Ciudad de Mexico

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Telephone: 202-473-3800
Fax: 202-974-4384

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