IFC to invest Sh309m in mobile phone microlender Branch

Branch, a Facebook-linked mobile phone money lending app, is set to receive an equity investment of Sh309 million from the International Finance Corporation (IFC) to fuel its expansion.

IFC, the World Bank’s private financing arm, says the investment will help increase the competitiveness of low-cost lending in the countries where Branch operates including helping the lender increase the tenure of its loans.

Branch, a Silicon Valley start-up, launched in Kenya in April 2015 and has since then disbursed Sh4 billion via mobile money platform M-Pesa. It also has a presence in Tanzania and Nigeria.

“Branch uses technology to dramatically reduce the cost of delivering financial services in emerging markets,” IFC says in its disclosures. “IFC is considering an equity investment in Branch, which will be used to finance the company’s continued growth.”

The microlender has in the past disclosed that it lends out Sh400 million a month to its 350,000 customers, with loans capped at Sh50,000, and repayable between one to 12 months.

READ: Facebook-linked mobile lender raises Sh200m for M-Pesa loans

The interest rates range from 13.6 per cent per month and can drop to 1.2 per cent as a borrower builds a credit history.

In September, Branch said the business had raised Sh200 million through a commercial paper, funds it said would be deployed toward growing its loan book.

The debt facility, which was arranged by Centum #ticker:ICDC-owned Nabo Capital, was snapped up by high net-worth individuals and fund managers.
The California-based Branch is now seemingly back on the capital-raising trail, with the latest financier being the IFC.

“IFC can support the company in mobilising connections with local banks and capital markets to access local currency financing,” IFC stated.