Verdant Capital has announced that its Verdant Capital Hybrid Fund has completed a $7 million dual-tranche investment comprising a subordinated loan and senior secured loan to Mogo Kenya, a subsidiary of Eleving Group operating in Europe, Asia, and Africa.
According to Verdant Capital, the investment will help Mogo Kenya expand its portfolio of fuel and electric-powered two-wheelers motorbikes locally known as “boda-bodas, tuk-tuk (three-wheeler), car, and car logbook or leaseback financing throughout the country.
The investment, which is the third for Verdant Capital, represents an important milestone for Mogo Kenya, the largest asset financing business of Eleving Group, established in 2018. In addition, MicroFinanza assigned Mogo Kenya a social rating grade of SBB in May 2023, representing adequate alignment with the fundamental principles of client protection. The social rating was mainly funded through Verdant Capital’s technical assistance facility.
Mogo is one of Kenya’s leading fintech asset financing businesses, specifically for bodabodas, tuk-tuks, and cars, which remain an essential mode of transport and commerce in the country.
On the electric motorbike financing, Mogo Kenya partners with electric motorbike suppliers such as Stima and Gecss; and ride-hailing companies such as Bolt and Jumia, to spread the adoption of climate-friendly e-mobility in the country with zero carbon dioxide emission and noise pollution.
“These electric motorbikes are cost intensive in terms of consumption and maintenance, allowing riders to save on their operating costs. Its business model accommodates and creates income generation and a discernible take-home income increase via asset ownership for the unbanked self-employed entrepreneurs and small business owners,” Verdant Capital said in a press release.
Mogo Kenya’s operations are backed by the strong use of technology, including automated processes, GPS tracking tools for the financed vehicle assets, and the use of digital payments via mobile money wallets.
The investment will provide Mogo Kenya with more funding for motorbikes (fuel and electric-powered), tuk-tuk, car, and car leaseback financing across the country. These financed vehicle assets are usually the principal source of income for the clients.
Mogo Kenya’s business model provides an affordable route for its clients to attain financial stability, the ability to participate in the economy and, in many cases, the first opportunity to have tangible wealth in the form of ownership of the financed vehicle assets.
Verdant Capital’s subordinated loan will strengthen Mogo Kenya’s balance sheet and help “crowd-in” more senior debt funding to further grow its balance sheet. The Fund was attracted by Mogo Kenya’s business model aligned with the Fund’s mission to use its funding to empower “bottom-of-the-pyramid” clients while benefiting from fundamental credit risk mitigants.