Brazil’s unicorn Loft buys CredPago in billion-dollar deal to expand financial front

RIO DE JANEIRO, BRAZIL – Three months after raising US$525 million, Brazilian real estate unicorn Loft announced the purchase of 100% of Curitiba-based fintech CredPago, a leader in rentals without collateral in Brazil. Loft now owns 100% of the fintech’s operations. In exchange, founders and shareholders received Loft shares and cash.

The billion-dollar transaction, considered a business amalgamation by the parties involved, was performed through an exchange of shares and capital. The fintech’s founders and other shareholders, including BTG Pactual, which held 49% of the company, now have a minority stake in Loft and continue to run the fintech.

Founded in 2016, CredPago resolves an obstacle for many rental contracts: finding a guarantor. With a technology that uses credit card data and ratings from rating agencies like SERASA, the fintech analyzes the risk profile of prospective renters and reports on their ability to pay within seconds.

In addition, the startup provides another valuable piece of information to realtors: how much the client can actually afford.

The company has grown tenfold over the past 3 years, with over 16,000 real estate clients and 123,000 contracts. After the acquisition by Loft, the startup plans to continue expanding its operation. “We should close 2021 with over 200,000 contracts under management,” the company’s founder and president Jardel Cardoso said.

For Loft, integrating the fintech into the group is a way to expand vertically its financial products area, which started in January last year and has generated R$2 billion per year in real estate loans. “The proptech’s financial products portfolio, which until now included real estate financing, now also includes solutions for rentals without guarantors,” Loft’s founder and CEO Mate Pencz said.

“We bought CredPago to continue investing more capital and technology in what they do well, but over time we can use their network of real estate partners to distribute other financial products that Loft offers,” Loft’s vice president of business Kristian Huber said.

Having BTG among its partners can help the unicorn in this project. The company has made an agreement with the investment bank to explore the possibility of bringing new financial products to both end customers and real estate agents and brokers. The plan is to help partners have more liquidity in their transactions.

“We are excited to continue as investors, now of the combined company, to structure new products together,” BTG Pactual’s CEO Roberto Sallouti said.

Financial products and partnerships with brokers and real estate agents are the way Loft has found to differentiate itself in the online real estate market. Founded in 2018 to buy, renovate, and sell real estate, the tech company realized early last year that it would have to explore other models to continue expanding.

At the time, the proptech had some 300 properties in its portfolio and would need plenty of capital to be able to scale up its operation.

The solution found by the partners was to convert the company’s online sales platform into a marketplace for third parties. Today the company has more than 20,000 properties in São Paulo and Rio de Janeiro registered on its website, and around 30,000 brokers and real estate partners.

The challenge is that other well-capitalized companies operate in this market, such as unicorn QuintoAndar and fellow giant OLX, owner of Grupo Zap.

Source: Exame

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