Verdant Capital said its Verdant Capital Hybrid Fund has completed $3 million
investment loan in Bfree. The investment, it said, will be used for distressed
loan portfolio financing whereby Bfree will be purchasing distressed
loan portfolios from inclusive financial institutions in Africa. In
addition, Bfree will benefit from initiatives supported by the Fund’s
technical assistance facility.
Bfree was established in 2020, and it is a leading ethical and digital
credit collection company in Africa. Bfree delivers digital and ethical
collection processes on distressed loan portfolios that comply with the
global industry ethical collection standards. Distressed loan portfolio
financing remains underexplored in Africa due to several factors
including the lack of effective collection procedures on distressed loan
portfolios, lack of accurate date for valuation of distressed loan
portfolios, loan transferability issues, price variations, and
ineffective judicial procedures. Bfree’s streamlined and principled
collection services address the challenges of large-scale collections in
the Retail and Small and Medium Enterprise (SME) lending sectors in
Africa. Bfree is significantly contributing to the reduction of
distressed loan portfolios in the financial services sector in Africa.
Bfree utilises a loan portfolio pricing model which uses proprietary
data to predict repayment rates for the distressed loan portfolios.
Since its incorporation five years ago, Bfree has experienced remarkable
growth, serving over 6.6 million borrowers with an estimated loan
portfolio value of over USD 740 million across its markets of
operations.
This investment aligns with the Fund’s mandate of providing funding to
financial institutions and impacting positively on the borrowers who
have defaulted on their loans with the end goal of increasing their
repayment rates and ultimately their credit scores as well as customer
satisfaction. In addition, BFree is aiding the financial services sector
by providing capital through purchasing of distressed loan portfolios
that would typically have been written down to zero. This adds both
capital and liquidity to financial institutions and allows them to focus
on their core business of lending.
This investment is yielding for the Fund, a return aligned with the
Fund’s return target, reinforcing the value of supporting high-impact
financial inclusion initiatives in emerging markets.
