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Verdant Capital Hybrid Fund makes first investment

Anna Lyudvig
Aug. 17, 2022, 12:26 p.m.
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Verdant Capital Hybrid Fund has announced its first $7m subordinated debt investment in Watu Credit Uganda to expand its footprint of two-wheeler financing throughout the country.

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Verdant Capital Hybrid Fund has announced its first $7m subordinated debt investment in Watu Credit Uganda to expand its footprint of two-wheeler financing throughout the country.

“The Fund’s investment will strengthen Watu’s balance sheet and help “crowd-in” more senior debt funding to further grow its balance sheet,” Verdant said.

“The Fund was attracted by Watu’s business model aligned with the Fund’s mission to use its capital to empower “base-of-the-pyramid” clients, while benefiting from fundamental credit risk mitigants.” 

The investment will help provide thousands of motorbike taxi (boda boda) drivers in Uganda with greater economic empowerment and asset ownership opportunities.

This represents an important milestone for Watu in Uganda, it’s 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 facility.

Watu is one of Uganda’s leading asset financing companies, specifically for two-wheelers.

The business model accommodates and creates opportunities for the unbanked and financially underserved population.

Watu’s operations are backed by the strong use of technology, including automated processes, GPS tracking tools for the motorbikes and the exclusive use of digital payments via mobile money wallets.

The Fund’s 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’s business model provides an affordable route for riders to attain financial stability, the ability to participate in the economy and, in many cases, the first opportunity to have tangible wealth in the form of ownership of a motorbike.

The Verdant Capital Hybrid Fund is a $100m fund (target final closing).

The Fund is targeting high developmental impact, including job creation and income generation through SMEs and micro-entrepreneurship.

The Fund is investing 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.

A strong focus will be to ensure that the investments comply with high environmental and social standards. 

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