African fintech M-Kopa has closed over $250m in new debt and equity funding to expand its financial services offering to underbanked consumers across Sub-Saharan Africa.
Over $200m in sustainability-linked debt financing was led and arranged by Standard Bank Group, Africa’s largest bank, with support from The International Finance Corporation (IFC), funds managed by Lion’s Head Global Partners, FMO, Dutch Entrepreneurial Development Bank, British International Investment, Mirova SunFunder and Nithio.
The debt financing is structured to support sustainability-linked goals with pricing that is linked to the achievement of environmental and social targets.
A further $55m in equity investment was backed by Japan’s Sumitomo Corporation, which is contributing $36.5m to the total raise. Blue Haven Initiative, Lightrock, Broadscale Group and Latitude, the sister fund to Local Globe, also participated in the transaction.
M-Kopa’s credit model allows individuals to pay a small deposit and get instant access to everyday essentials, including smartphones, electric motorcycles and solar power systems, and then graduate to digital financial services such as loans and health insurance. The firm’s technology embeds credit into the product through a smart digital connection, giving customers ownership instantly, which they can pay off through micro-instalments over time. The company has sold over three million of these products through a direct sales model that includes more than 10,000 agents.
M-Kopa’s operations started in East Africa and successfully expanded to Nigeria in 2021 and, more recently, Ghana. From 2020 to 2022, M-Kopa recorded a compound annual growth rate of 85% in new customer acquisition, reaching over three million customers and providing over $1 billion in cumulative credit for underbanked customers in Africa. The company says it is on track to acquire an additional million customers over the course of 2023.