“We are pleased to share that we have secured $810 million USD in financing deals with HSBC, Goldman Sachs, and Santander,” the used car company Kavak, one of the largest startups in the region, communicated on Tuesday on its LinkedIn.
In the publication, with a link to the news to Bloomberg (where Kavak’s CFO, Moisés Flores, gave statements), they highlight the support and trust of these financial institutions and tell that the funding will allow them to improve the customer experience and create new services “that help citizens solve their mobility problems.”
Most of the financing comes from HSBC. The bank will provide US$675 to purchase part of Kavak’s current and future loan portfolio in Mexico. While Goldman Sachs and Santander are providing a US$135 million loan, secured by Kavak’s assets, including warehouses and automobiles.
Flores told Bloomberg that the company is negotiating yet more debt financing with banks, and this could amount to US$1.2 billion by the end of the year, considering the resources raised this week.
The CFO added that the financing announced has been under negotiation for 18 months with the banks, that the company has funds for at least 36 months, and that the company will become profitable in Mexico in the next six months.
With the news, Kavak joins the growing group of startups that are resorting to debt to finance themselves. This is a global trend, as an investment is scarce during the recession. In LatAm, it has been seen for some time, with RappiPay and Clip being recent examples.
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