Goldman Lends MercadoLibre $125M

Goldman Sachs is loaning $125 million to Mercado Crédito, a unit of MercadoLibre.

This is the bank’s third loan to a Latin American FinTech in 2019 — and the biggest ever in Mexico. The funds will be used to triple the unit’s $100 million working capital portfolio, provided to small and mid-sized businesses in Mexico, according to Martin de los Santos, SVP of Mercado Crédito, adding that the goal is to “democratize financial services.”

While MercadoLibre is based in Argentina, its financial statements revealed that almost two-thirds of its $603 million in third-quarter net revenue came from Brazil. In October, the company announced plans to invest more than $718 million in the country next year. In 2019 alone, the Latin American eCommerce pioneer has seen its market value more than double to $29 billion.

Launched in 2016, Mercado Crédito offers credit to clients of its parent company, as well as to customers using its online payment platform, Mercado Pago, in Brazil, Argentina and Mexico. The company has provided more than $610 million in working capital credit lines to more than 270,000 companies in Latin America, and has offered around $200 million in consumer loans.

The Goldman Sachs loan won’t be used to finance lending in Brazil. “We wanted not only Goldman’s capital, but also the experience the bank has on this type of [transaction] throughout Latin [America],” said Santos. “I hope to work with the bank in the future to finance other portfolios, including consumer operations in Mexico and other markets.”

Goldman Sachs’ loan is being done via the company’s structured finance, investment and lending business, headed by Ram Sundaram. It also provided a secured credit facility of as much as $100 million to Mexican FinTech Konfio in August.

“We look forward to keep supporting MercadoLibre across the region as their lending footprint grows,” Sundaram said in a statement.