SoftBank’s Greensill acquires Omni Latam to finance more regional SMEs

Contxto – A London-based fintech wants to strengthen its foothold in Latin America. But rather than expanding its already-established Americas team, it’s chosen to make a regional acquisition.

To that end, today SoftBank-backed Greensill announced that it bought Colombian Omni Latam in an all-stock deal.

Omni Latam was already operating in Colombia and Chile and had procured approximately US$300 million in working capital products to small and medium-sized enterprises (SMEs) since its founding in 2018. Now as part of the Greensill team, efforts will be directed towards expanding into Brazil and Mexico.

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Greensill and Omni versus SMEs’ credit squeeze

Greensill is a fintech that procures working capital for businesses around the world. And through Omni Latam’s platform and loan-related product portfolio it wants to address Latin American SMEs.

Lending market size: Greensill found that Latin America’s market for working capital finance could be valued for around US$750 billion. This can be largely attributed to the fact that a significant share of its population and entrepreneurs don’t have full-access to financing opportunities.

What’s more the coronavirus outbreak is only aggravating SMEs’ chances of obtaining financing.

“In Chile alone, we saw a 40 percent month-on-month fall in the amount of capital being obtained by SMEs,” observed Omni’s co-Founder, Jaime Caicedo. “Banks are cutting credit because they’re running blind and afraid of what’s to come.”

So while traditional financial institutions run about trying to figure out their next move, SMEs are left standing in the dark to fend for themselves.

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Despite this grim picture, Omni and Greensill remain optimistic about the regional opportunities to be found. That of course entails understanding SMEs, their risks, and revenue sources then procuring the right type of loan.

What they’re looking for: When it comes to Omni’s approach towards SMEs, it reviews their invoicing (as opposed to financial statements) to understand their operations. Moreover, it specializes in small businesses that supply larger-sized ones such as retail chains.

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-ML