IFC invests a substantial sum of $45.6M in Lendable to enhance the access to credit for small and medium-sized enterprises (MSMEs).
London-based asset manager Lendable Inc. has announced the launch of its second MSME Fintech Credit Fund, the Lendable MSME Fintech Credit Fund II (LMFCF II). This new fund, backed by the International Finance Corporation (IFC), aims to provide credit financing to fintech lenders who serve underserved small and medium enterprises (SMEs), with a particular focus on women entrepreneurs in Africa, Asia, and Latin America.
The LMFCF II builds on Lendable's successful 2023 close of its first MSME Fintech Credit Fund, which raised $110 million, surpassing its $100 million goal. The IFC has pledged up to $45.6 million in debt funding to the new fund, while a $4.4 million co-investment from the Women’s Entrepreneur Finance Initiative (We-Fi) could supplement the funding.
Lendable, founded in 2014, focuses on supplying debt financing to fintechs in developing markets, using data-driven underwriting to manage risk. The company, which has offices in Nairobi and Singapore, has already deployed over $340 million across 14 countries. By December 2024, Lendable had deployed $576 million across 18 countries, maintaining a low default rate of 2.3% and achieving a 13.15% annualized net internal rate of return (IRR) since its inception.
The funding for the LMFCF II will be managed by Lendable and will be deployed over five years, with a two-year repayment phase to follow. The fund's objectives align with the growing recognition of the importance of digital lenders in bridging credit gaps in emerging markets.
Approximately 1.4 billion adults remain unbanked worldwide, and digital lenders, using alternative credit scoring and mobile money systems, are increasingly seen as a potential solution. The IFC's investment in the LMFCF II underscores this growing significance.
The LMFCF II's focus on women-led businesses is particularly noteworthy, given that Global MSMEs face a financing gap of $5.2 trillion. By providing credit to women entrepreneurs, the fund aims to promote financial inclusion and economic growth in the targeted regions.
Regulatory oversight has become stricter in countries like Nigeria and Kenya, and higher interest rates and currency fluctuations in Africa have put pressure on some digital lenders. However, Lendable's data-driven strategy and proprietary platform, Maestro, which connects with fintechs' banking and customer management systems to enable real-time loan tracking, aim to manage these risks and provide value to both investors and borrowers.
The previous Lendable MSME Fintech Credit Fund attracted backing from development finance institutions like the U.S. International Development Finance Corporation (DFC), Japan's JICA, and the Dutch development bank FMO, as well as commercial investors. The success of the first fund and the strong backing for the LMFCF II suggest a sustained confidence in the sector's potential.
Fintech adoption is accelerating across the Global South, indicating a continued belief in the sector's ability to address financial inclusion challenges. For precise, up-to-date information on the fund’s current status and measurable impact, including loan volumes, number of women-led businesses supported, or geographical reach, consulting IFC’s official reports, Lendable’s press releases, or specialized financial development news sources directly would be necessary.
- The Lendable MSME Fintech Credit Fund II (LMFCF II) aims to leverage technology to facilitate mobile money and foster investment in underserved businesses, predominantly women entrepreneurs, in Africa, Asia, and Latin America, as a means to promote financial inclusion and economic growth.
- Despite regulatory challenges and economic pressures in developing markets, Lendable's data-driven tech adoption and proprietary platform, Maestro, enable the company to manage risks associated with credit financing in these regions, thereby providing value to both investors and borrowers.
- The growth in adoption of technology in the Global South, particularly in fintech, suggests a long-term commitment from investors towards addressing financial inclusion challenges, as demonstrated by the successful launch of the LMFCF II and the backing it has received from organizations like the IFC and We-Fi.
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