Branch International, the digital lending app, has announced the full repayment of a KShs 500M commercial paper. On top of this, the company has announced the issuance of yet another commercial paper of the same amount. This is the fourth note by the company in partnership with Barium Capital, the Centum-owned advisory firm.
This fourth commercial paper brings the total capital raised by the company locally to more than Ksh 1.5 billion. Branch has revealed that it will use the latest investment to expand its services in Kenya. Recently, we have seen the explosion of digital lending services in the country with different players wanting a piece of the pie. From traditional banks to independent companies, it seems like everyone wants a share of this lucrative sector.
Speaking after the close of the issue, Teresia Muthoni, Barium Capital’s Managing Director, said “Our investor base continues to be keen to be part of Branch’s growth story and we’re proud to have secured them an opportunity to do so.”
The main reason for the steady growth of this sector has to do with the structure of our financial services. For years, traditional banks and financial institutions had the advantage but the problem is they were not flexible enough to cater for those who need to borrow low amounts. If you wanted a loan from a bank, you had to request for a huge amount but this all changed with digital lenders like Branch.
Most digital lenders can extend loans of small amounts from as low as Ksh 250. These are to be repaid within a month or so. The loans are also disbursed within minutes so the borrower does not have to wait a long time to know if they are getting the amount they requested or not.
The latest investment announced by Branch supplements the KShs 17 billion raised earlier this year from top international investors, including the World Bank Group’s International Finance Corporation, Visa, Foundation Capital, Trinity Ventures and Andreessen Horowitz.
Thousands of Loans Daily
Branch issues tens of thousands of loans per day and has disbursed more than KShs 30 billion in Kenya. The company has also revealed that most of its loans are used for small business start-up costs and ongoing business investment. There are people who may not be happy with the easy access to loans such services provide. But if you think about it from the small business owner’s perspective, this can be a live saver in times of need.
Dan Karuga, East Africa General Manager for Branch commented: “With the high rate of smartphone adoption in emerging markets, Branch is uniquely positioned to leverage its advanced use of data science to underwrite and provide credit and other financial services to more customers than ever before. As we scale our services in Kenya, we welcome regulation of our sector and looking forward to working with the Kenyan Government on this initiative.”
