Investment opportunity - May 2021 - Smart decisions. Lasting value.
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Smart decisions. Lasting value. Investment opportunity May 2021
Disclaimer This document has been prepared by Crowe GCA S.A.S for information purposes and is being provided to interested parties. This document contains confidential information and is provided for exclusive use of whom it is addressed to. Crowe GCA S.A.S expressly states that neither of its partners, its directors, its employees, representatives or affiliates have audited or verified independently the sources of information that had been analyzed for this document. Therefore, Crowe GCA S.A.S does not affirm or certify its veracity, or will be accountable for any information or certification, be it explicit or implicit, contained in this document, or for any oral or written communication, provided or addressed to the recipient of this document in the course of the evaluation of its participation in this process. Equally, Crowe GCA S.A.S, its consultants, staff members, partners or employees will be subject to any responsibility, present or future, that may arise from this document or any information related to it, be it or not that the entity or its consultants know, or should have known, about any error or omission. This document has been prepared to assist stakeholders in analyzing the operation and does not seek to be exhaustive or contain all the information that an investor must consult to evaluate the possibility of participating in a process. © 2021 Crowe GCA S.A.S. 2
Macroeconomic environment
Investing in Colombia Macroeconomic forecast for Colombia
Resilience when facing the Covid-19 crisis: ▪ It is estimated that the economic contraction that occurred in 2020 presented a reduction in the GDP
▪ Colombia is one of the most economically stable countries in the region. During 2010 to 2019 the between -6.8% and -7,4%, heading towards a gradual recovery that should go on in 2021, year in
Colombian economy has grown 3.9% on average. This gives the country a higher resistance which the economy is expected to grow between 2% and 6% according to the Central Bank (Central
point when facing the 2020 economic impact. Bank of Colombia).
▪ During the last decade, Colombia stood out for its political stability and a strong respect for ▪ According to S&P’s reports, Colombia is in comparison one of the strongest economies in the region
private property and initiatives. and is expected to recover at a faster rate.
Reliable Partner
GDP (Annual Variation in %)
▪ Investment rate in all global indicators (Fitch: BBB-, S&P: BB+ y Moody's: Baa2).
▪ Standard & Poor's, Moody's y Fitch consider Colombia will reactivate its economy at a faster rate 6,0%
7,1%
6,0%
5,8% 5,4%
than its regional peers due to its economic stability and crisis management.
2,6% 2,5% 2,8% 3,3%
▪ Colombia is a member of the OECD. 2,2%
1,3%
Global market 2,0%
▪ Colombia has access to 16 international trade agreements, granting it preferential access to 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020pr 2021pr
more tan 60 countries and 1.500 consumers.
▪ Doing Business -6,8%
-7,4%
Colombia Consumer Price Index (CPI)
70.1 (65th place)
0 100 6,8%
Score
5,8%
3,7% 4,1% 3,8%
3,7%
Peru 3,2% 3,2%
Colombia is the best qualified country in South 68.7 (76th place) 2,4%
1,9% 1,60% 3,0%
America in the Doing Business 2020 ranking of Uruguay
the World Bank. It occupies the 65th spot among 61.5 (101st place)
190 countries. 1,5%
Brazil
59.1 (124th place)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021pr
Source: National Statistical System y Central Bank of Colombia
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Macroeconomic Industry overview Company & Product Market Forecast Investment 3
© 2021 Crowe GCA S.A.S.
environmentIndustry overview
Key facts / Source: Finnovista
Positioning in Latin America Growth by segment in Colombia
▪ The loan segment, for both consumers and businesses has grown from 36 to 48 startups with a 33%
growth rate.
441 companies 377 companies 200 companies
% growth per segment
▪ There are 200 Fintech companies, in Colombia according to Fintech Radar by Finnovista. The
80%
industry has grown 26% compared to Mexico (14%).
40%
▪ The forecast states that in three years, Colombia will have an ecosystem of 400 Fintech 33%
14% 12%
companies. 0% 0%
Fintech per year in Colombia -10% -8% -17%
-30%
200 Payments & Loans Enterprise Crowfunding Personal Wealth Insurance Scoring, Trading & ETFI Digital
Remittances Financial Financial Management Identity & Markets Banking
150 Management Management Fraud
100
50
0
2016 2017 2018 2019 2020 Target segments for Fintech companies in Colombia
Main market segments in Colombia for 2020 Financial
inclusion for
▪ The local Fintech ecosystem is considered a mature market
SMB’s and with 71% of its companies at a growth and expansion stage.
consumers
Banking SMB’s 45% ▪ 61% of the startups have received external financing.
Payments &
19% ▪ The target customers for these companies are mainly SMB’s
transfers
and consumer loans (45%).
ETFI*
25% 22% 14%
Loans
48 companies 43 companies 27 companies ▪ Consumer loans range from USD $30 y USD $227, with an
19% 16%
interest rate around 25% EAR.
B2C banking
B2B corporate
consumer
(*) Enterprise Technologies for Financial Institutions and financial
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Macroeconomic Industry overview Company & Product Market Forecast Investment 4
© 2021 Crowe GCA S.A.S.
environmentCompany & product
Company profile Differentiating factors
Leading Colombian based Fintech, based on providing credit solutions
for people with limited access to the financial system and legal credit
solutions, encouraging financial inclusion.
10 minutes to 5 seconds for 24 hours loan
request approval available
Rapicredit sets apart form its competition through its added value in
Foundation: 2014 Operation: terms of service speed, approving credits in less than 24 hours.
The company has strategic alliances with important companies such
Staff: +80 Coverage: 100% as:
online
77k collection 50 security Proprietary decision
points nationally filters algorithm
Competitive advantages Key metrics
+190k +800k
clients credits granted
Product Market Value Proposition +USD 60M 8%
disbursements in loans historic default rate
100% digital loan Socioeconomic level Agility and safety
solution 2y3
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Macroeconomic Industry overview Company & Product Market Forecast Investment 5
© 2021 Crowe GCA S.A.S.
environmentCompany & product
▪ Most recent product on the market.
▪ Loan is subject to an anticipated payment in salary.
▪ The MVP is being tested with Be to Bee.
76 USD 5-30 days 5 chances to roll-
average ticket credits at one fee over
payment
Working capital for businesses Loans
Buy today, pay Point of sale
later
Education 100% digital
Integration with Alliances with
Installment request with
e-commerce.
Computers and cellphones outlay to a bank points of sale
loan (3-24 Payment button for on-site
account or an
months) to finance online payments.
external agent
Travel (Efecty)
shopping with
allied
establishments.
Home electronics
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Macroeconomic Industry overview Company & Product Market Forecast Investment 6
© 2021 Crowe GCA S.A.S.
environmentCompany & product
Unit Economics Client metrics
2016 2017 2018 2019 2020
ROI/ $9 $11 $12 $14 $9
Loan
Loans/ 4.5 4.7 4.9 5.0 4.0
Clients
$63 $85 $7,6 7% $115 $165 $264 $300 $157
LTV
Capital Collection Cost x loan NPL
Credit fees $11 $18 $15 $11
CAC $15
Interest rate: 25% E.A.R.
Aval: 10.8% one-time fee + 0.1% by the number of days
Technology: USD $0.34 by the number of days CAC/LTV 10x 9x 18x 26x 10x
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Macroeconomic Industry overview Company & Product Market Forecast Investment 7
© 2021 Crowe GCA S.A.S.
environmentTimeline & client profile
Timeline
New product (Rapiplazo) – Risk model adjustment
New in-house risk model
New product: roll-over loan (novation)
Integration with Mintos.com (first originator in LATAM)
Launched Colombia’s first bot
Launched 1st Colombia’s first Android App
90.034 clients
Launch MVP 2.748 clients 20.164 clients 85.622 clients
USD 703k loans USD 6.1M loans USD 15.4M loans USD 17.6M loans granted
granted granted granted 574 RapiPlazos
3 loans per client on 5.8 loans per client on 6.7 loans per client on granted
average average average
2014 2015 2016 2017 2018 2019 2020
Client profile
Economic level Population Household income
(million) (minimum wages)
25-45 years old High class 2 >10x
Current market Income range 5, 6
43% female / 57% male 9,2 millions
Middle class
3 3.5 – 10x
Income range 4
Employees, average income 1-3
minimum wages (USD250 – 750) Mid-low class 10
Income range 3 2 – 3.5x
Minimum degree: technical (70%) Low class 17
Income range 2 1 – 2x
56% of clients are located in Bogota
Low class 12
and Medellín Income range 1Executive team & equity structure
Executive team Equity structure
▪ 75% are ordinary stocks are owned by Credimax LLC.
▪ The other 25% are preferential stocks signed over in an investment agreement in September
2017. They represent 25% of the subscribed and payed equity in the company.
Daniel Materón Juan Saldarriaga José Fernando Belalcázar Belcolinvest Andes Horizon Capital
Chief Executive Officer Business Development Chief Financial Officer
3% 3%
30 years of experience 30 years of experience 20 years of experience
JHC SCP
19%
Alejandro Vélez Sebastián Arenas Luisa Martínez
Chief Relationship Officer Chief Technical Officer Chief Marketing Officer
15 years of experience 15 years of experience 20 years of experience
Credimax LLC
75%
Johana Sanchez Ysamar Meza María Cecilia Castro
Product Manager RapiCredit Chief Risk Officer Chief Customer Relationship Officer
8 years of experience 6 years of experience 10 years of experience
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Macroeconomic Industry overview Company & Product Market Forecast Investment 9
© 2021 Crowe GCA S.A.S.
environmentStrategic Alliances
Collection Associations Risk Management
Banks Technology Other services
Institutional Investors
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Macroeconomic Industry overview Company & Product Market Forecast Investment 10
© 2021 Crowe GCA S.A.S.
environmentMarket analysis
Market size Market share
34.8 M Adult population in Colombia
Other fintech
21.8 M Adults with an active bank account 55% 35% 10%
Market size (2019) 800-900 k
12.6 M Adults with an active bank account, without In loans
a credit card Source: https://www.entornointeligente.com
USD 76
Adults with an active bank account, without
8M X Average Rapicredit loan Market potential
access to credit products
X
750K Colombia’s middle class as % of population
Rapicredit’s new clients over next 3 years
6 46%
Loans per year, per 37%
client.
25%
25
19
Millions
= 16%
12
+ USD 70 millions USD 3.6 billion 7
Disbursements over next 3 years for new
clients
TAM
2002 2012 2020 2025
Source: Fedesarrollo y Euromonitor
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Macroeconomic Industry overview Company & Product Market Forecast Investment 11
© 2021 Crowe GCA S.A.S.
environmentForecast Post Covid-19
Loans in the last 30 days Non Perfoming Loans (NPLs) / 120 days in default
25/03/2021
40.000
20/03/2020 32.412
Pre-Covid Post-Covid
30.998
35.000
30.000 16,3%
15,7% NPL 120d level is better than
14,8% Pre-Covid levels
25.000 14,1%
Loans 30 days
13,9%13,6%13,6%13,6% 13,7%
12,3%
20.000 11,9% 11,9% 11,9%
11,3%
10,5% 10,3%
15.000
7,9%
10.000 6,8%
6,1%
5.000
0
22/05/14 22/05/15 22/05/16 22/05/17 22/05/18 22/05/19 22/05/20
Loan origination reaches Rapicredit decided in March 20th make the
Pre-Covid levels adjustment in the risk model in order to prevent
increase in Default. No new loans were permitted
Average: Average:
during this period (March 20th and April - 2020) 14,2% 10,3%
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Macroeconomic Industry overview Company & Product Market Forecast Investment 12
© 2021 Crowe GCA S.A.S.
environmentProyecciones – Post Covid-19
Loans per year (in thousand) Operational income (USD ‘000)
2.500
60.000 56.064
2.071
2.000
1.531 37.403
1.500 40.000
1.030 23.611
1.000
514 20.000
11.337
500 277 284 5.786 5.209
70 120
1.549 2.033
- -
2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 2024
Rapiflex - Historical Rapiflex - Forecast Rapiplazo - Forecast Revenue - Historical Revenue - Forecast
Portfolio - Principal and fees (USD ‘000) EBITDA (USD ‘000)
75.000
63.374 40.000
29.194
30.000
50.000
38.662
19.281
20.000
25.121
25.000 10.234
13.934 10.000
7.023 7.267 -501 1.084 2.533
1.636 3.369 -674 -353
-
-
2017 2018 2019 2020 2021 2022 2023 2024
2017 2018 2019 2020 2021 2022 2023 2024 -10.000
Portflio - Historical Forecast - Forecast EBITDA – Historical EBITDA - Forecast
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Macroeconomic Industry overview Company & Product Market Forecast Investment 13
© 2021 Crowe GCA S.A.S.
environmentInvestment opportunity
Debt investment Equity investment
USD 40 million USD 10 million
International expansion
▪ Will finance working capital (new loans). ▪ USD 2 million to refinance short term debt.
▪ Attractive returns for investors ▪ USD 3 million for working capital (new
guaranteed. loans) and future projects. Ecuador
▪ Equity guarantee with a trust fund. ▪ USD 5 million by 2022 to initiate a regional
expansion.
▪ Rates in function of amounts, duration and
return of capital investments. ▪ Better indictors will allow the company to Chile
obtain a low financing cost in the long
▪ Portfolio assignation for specific cases.
term.
Perú
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Macroeconomic Industry overview Company & Product Market Forecast Investment 14
© 2021 Crowe GCA S.A.S.
environmentContact information
Lía Heenan Enrique Del Real Gonzalo Hoyos
Partner Manager III Senior II
Mobile: +57 316 7410345 Mobile: +57 312 3515868 Mobile +57 315 5338325
lia.heenan@crowe.com.co enrique.delreal@crowe.com.co gonzalo.hoyos@crowe.com.co
Address:
Crowe GCA
Street 16 # 93-92
Crowe Building
Bogotá D.C. – Colombia
Phone: +57 1 6059000
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