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Contxto – Ualá, the Argentine challenger bank, adds yet another legendary investor to its cap table. Tencent, the Chinese telecom giant, has decided to fund the fintech startup with hopes of attracting more users.
WeChat’s holding company, Tencent, is clearly placing big bets on Latin American banking alternatives. After investing in Nubank a couple of months ago, the company saw a big enough market to invest capital in yet another challenger bank.
While the amount was undisclosed, we have already contacted the founder to better understand the investment and what the funds will be used for. Pierpaolo Barbieri, the founder, believes that this investment represent Tencent’s assurance in the long-term future of Argentina.
Ualá aims to fix the inefficient banking system in Argentina, where less than 50 percent of the population has a basic bank account. Generally speaking, the country is in the midst of a bad recession with its ongoing financial crisis. Moreover, inflation has been soaring through the roof nowadays.
To remedy this, foreign investments from companies like Tencent may put some investors at ease. Hopefully, it’ll promote confidence and reduce some nerves among nationals as they approach the upcoming presidential elections in October.
The company previously raised capital from George Soros, Steve Cohen and Goldman Sachs. From October 2017 to December 2018, it had already issued over 500,000 debit cards, and it is currently preparing to launch a new UI for its app.
Recently, Ualá also launched a new program allowing people to purchase public transportation cards, SUBE, through the app.
One thing is certain – Latin America’s financial market is huge yet massively underserved. Tencent’s investment in Nubank, and the fact that it’s already positioning itself in Argentina, didn’t stop them from also financing Ualá. That’s what I call having confidence in a trending industry.