Business

The most valuable unicorn in the region received a new investment of USD 810 million

Last year, the company achieved a market value of USD 8.7 billion
Last year, the company achieved a market value of USD 8.7 billion

Kavak, the unicorn startup of Mexican origin for buying and selling used cars, became last year the private company – which is not listed on the Stock Exchange – with the highest valuation in Latin America. At that time it reached a market value of USD 8,700 million and now it has just announced a new series of financial agreements with the banks HSBC, Goldman Sachs and Santander for another USD 810 million.

The company, which was born in 2016, has been operating in Argentina since 2020 and has an online catalog of more than 1,800 cars, 6 commercial offices, a 17,000 m2 reconditioning plant in the town of Tigre and almost 1,000 employees.

The agreements granted the Latin American unicorn a financing of USD 675 million from HSBC, through a framework contract for the sale of portfolio, in which Kavak assigns the collection rights regarding the financing it grants to its clients for the purchase of used vehicles. In addition, the company received a credit line for USD 100 million from Goldman Sachs, and another for USD 35 million from Santander, resources that will be used in the development of its business model and growth of its inventory, to continue its growth.

Moises Flores, CFO of Kavak
Moises Flores, CFO of Kavak

“In a challenging international context, where access to financing has become more complex for the startup ecosystem, these types of agreements only confirm the solidity of our business model. We are revolutionizing the pre-owned car market in Latin America, providing security, agility and transparency, in an industry that has not innovated for decades, and these types of financing lines help us deepen the change”he told Infobae Moises FloresCFO of Kavak.

“Today in Latin America, 90% of used car transactions are between individuals. In general, it is usually a very stressful moment, with various risks and the mistrust that involves carrying out transactions of high economic value with strangers. That is why it is an enormous opportunity for us to offer a completely innovative experience that, on the one hand, eliminates the mechanical and documentary fraud that usually occurs in this type of operation, and also provides financing, mechanical guarantees and post-sale services that are unique in the market. Doing all this at scale, processing and transferring thousands of cars simultaneously on two continents is a challenge that requires a lot of muscle and constant investment in infrastructure, equipment and systems”, highlighted the company’s financier.

The company has among its investors Softbank, General Atlantic and Greenoaks
The company has among its investors Softbank, General Atlantic and Greenoaks

In addition to Mexico and Argentina, Kavak has a regional presence in Brazil, Chile, Colombia and Peru, and recently opened its first operation outside the region in Turkey. Among its investors are Softbank, General Atlantic and Greenoaks, which disbursed more than USD 1.6 billion in five financing rounds. Now they added HSBC, Goldman Sachs and Santander.

Kavak also offers financing and noted that many of its clients receive credit for the first time in their lives. “This tool is a clear differentiator, and explains that 40% of Kavak’s operations are people who buy their first car; proof of the company’s ability to provide financial and mobility access,” the company said.

“In countries like the United States, 7 out of 10 citizens have a car, which contrasts with Latin America, where only 1.5 out of 10 inhabitants have been able to buy a car. This is the reality that we want to transform, and we will not rest until we become a true agent of change that solves the mobility problems of thousands of citizens”, Flores pointed out.

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