A crisis is synonymous with putting the brakes on, right? Not for fintechs in Brazil, which are experiencing an intense moment of new investments, mergers, and acquisitions. The newest operation in the sector is being announced this Thursday by the receivable prepayment fintech Liber Capital. The company is buying 60% of another fintech in the same industry, called Adianta. Together, they will have an active portfolio of BRL 3 billion (almost $587 million).
Both companies are contemporary, were created in 2017, but have different credit origination models and also very different customer profiles. Adianta raises funds with its own receivables investment fund (a type of fund composed of receivables from different types of issuers and called FIDC in the acronym in Portuguese) to anticipate amounts for small and medium-sized companies, which earn an average of BRL 15 million per year, having granted BRL 200 million in credit to date. These customers reach Adianta via Google search, freelance agents and other partner companies.
Liber Capital, in its turn, structures and operates financing programs for supply chains of large companies, that is, it operates in a closed cycle. “We look for financiers (there are about 1,000) among banks, funds, and other companies. With this structure, knowing who the debtor is, the company that owns the credit, and the lender, the risk is diluted “, explains Liber’s CEO Victor Morandini Stabile to LABS.
Why the acquisition at this time?
First, because the crisis also brings opportunities. Given the difficulty in obtaining loans from the larger banks amid the pandemic of the new coronavirus, companies, of all sizes, have been looking for alternative channels to raise funds. In the first half of this year alone, Liber reached BRL 3.3 billion in transactions, a jump of 1,000% compared to the same period in 2019.
“But Liber is only able to anticipate receivables held against partner companies, which sometimes corresponds to 10%, 15%, 20% of the total that the supplier has to receive. With the acquisition of Adianta it is possible to make a broader assessment of this supplier, and anticipate the other 80% of potential receivables, increasing the amount transacted in general”, points out the CEO of Liber.
Secondly, because competitors are also moving in this direction. Last week, XP Inc. acquired a majority stake in Antecipa, another fintech in the receivables industry.
“We had been talking about a partnership for about two years. We were also approached by other traditional players, but we preferred to join with another fintech, which is on the same level, to maintain independence, speed, innovation, characteristics that are part of the same mindset”, says Marco Camhaji, Adianta’s CEO to LABS.
The complete union of the two fintechs, explain the two executives, can take up to two years. In terms of employees, Liber has 50 and Adianta 20. “We are still evaluating how to cross-sell (the solutions to both customer bases), how will the new brand be. Up to two years, we imagine that we will be a single company,” says Stabile.
Together, the two fintechs will also be able to explore the potential of a novelty for the entire segment: the regulation of electronic trade bills, launched in May in Brazil. Most experts say that the digitalization of these bills has the potential to increase credit granting and to make the receivables market less bureaucratic, making the process as secure and centralized as that of card receivables.
According to Valor Econômico, the Brazilian Central Bank, which still needs to define a standard for electronic trade bills registers across the country, believes that digital trade bills may represent a change similar to the one that payroll loans brought to personal credit in the mid-2000s in Brazil. That is, considerably lower costs and interest rates in the segment.