Goldman Doubles Down on MercadoLibre Bet With Brazil Loan
Goldman Doubles Down on MercadoLibre Bet With Brazil Loan
(Bloomberg) -- Goldman Sachs Group Inc. has agreed to lend 400 million reais ($72 million) to Mercado Pago, the fintech arm of e-commerce giant MercadoLibre Inc., in a bet that credit lending will grow in the company’s largest market.
The loan will be used to bolster Mercado Pago’s working-capital portfolio aimed at small businesses and entrepreneurs in Brazil, according to Martin de los Santos, a senior vice president at Mercado Credito, the area responsible for such loans. Last December, Goldman loaned the company $125 million to expand credit in Mexico.
“We’ve seen an increased demand for credit amid the pandemic as traditional providers diminished” the products they were offering to merchants like those MercadoLibre is going after, de los Santos said in an interview. “The loan will fund the strong growth we’re seeing for the next year at least.”
MercadoLibre is among the biggest regional winners of the coronavirus pandemic. The company’s shares have jumped 81% this year and revenues surged as prolonged lockdowns across the region lead small businesses to turn to online sales to stay afloat. The company uses data from their merchants to analyze their credit profiles and assess that it will get its money back even in the rapidly-evolving macroeconomic scenario, according to de los Santos.
MercadoLibre started offering credit services in 2016 and has granted more than $1 billion in working-capital credit lines across Latin America since then. Its current merchant credit portfolio in Brazil stands at $105 million. Besides loans to merchants, Mercado Pago unit is also in talks with several banks to fund an expansion into the company’s existing consumer loan portfolio, de los Santos said.
“There’s a lot of interest and we’ve been discussing with international and local banks,” he said.
Goldman Sachs has remained in contact with Latin American companies amid the pandemic, according to Santiago Rubin, a managing director at Goldman Sachs who’s head of technology, media and telecommunications for Latin America.
“We expect to execute several other financings with clients in the region in the near term,” he added.
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