(Bloomberg) -- Creditas Financial Solutions Ltd., one of Latin America’s most-valuable fintechs, emerged from the tech downturn with losses halted and half its staff. 

The Sao Paulo-based firm, which was valued at $4.8 billion in January 2022 in an investment round led by Fidelity Management & Research Co., was one of the few fintechs in the region able to reach the global debt markets in 2023 with an unsecured plain vanilla bond. And it has plans to do more this year, according to founder and Chief Executive Officer Sergio Furio.

“Until 21, growth was our only focus, we doubled size each year; but since March 22 we changed strategy and entered a transition phase where the goal was to reach profitability,” he said in an interview. 

Creditas reduced the growth pace to about 30% in the last two years, while cutting costs and slowing down hiring. It also changed prices of its loan book after a hike in Brazil interest rates. 

Its team, that hit nearly 4,000 employees in 2022, is now around 2,000. 

The company, which has a credit portfolio of 5.5 billion reais ($1.1 billion), posted 2 billion reais of revenue last year and reached the so-called break-even point — when costs are equal to income — in December. 

Creditas uses collateral such as homes and vehicles to reduce risk in loans to individuals, cutting rates charged from 140% on average at the Brazilian credit market for unsecured loans to about 35%, while also lengthening maturities. It also does payroll lending for employees of non-government owned firms. 

In Mexico, where interest rates are much lower, but access to credit is smaller, Creditas uses the same collateral structure to try to boost approval rates.

“We want to keep Creditas with net profit close to zero, reinvesting all the gains in order to keep growing about 30% a year,” Furio said. 


While the fintech doesn’t need more equity investments as of now, it doesn’t mean the firm won’t do more fundraising. 

Last year, Creditas raised $40 million in global bonds sold to a group of about 25 investors in Europe, after a meeting with fixed income investors in Stockholm, where VEF AB, a fund that invests in financial technology firms, is based. Creditas represents about 45% of VEF’s net asset value, according to Furio.

The fintech could return to the global bond market this year for as much as $60 million, Furio said. 

“We just had a meeting with a group of investors and I think there is still appetite for more of our bonds,” he said.

Previously, Creditas had used debt capital markets only in Brazil, raising about $1 billion through securitization structures. In June 2022, it bought a bank license in the country from Andorra-based Andbank, a transaction that still pends approval from the central bank and will allow the fintech to use deposits as funding.  

Startup turnaround

Venture capitalists came to Latin America after watching the rise of fintechs in Asia, where WeChat and Alipay became global behemoths by signing up China’s unbanked masses. Hoping for a similar feat, backers pumped capital to legions of startups in the region — but in 2022, rising global interest rates took a toll on risk appetite. Fintechs were forced to merge, pull back on expansion plans and sell assets to survive as investors demanded fewer promises and more immediate profitability.

Furio is a native of Valencia, Spain who spent time previously at Deutsche Bank AG and the Boston Consulting Group before founding Creditas in 2012. Along with the management team, he owns about 20% of the firm, he said, without specifying his exact stake. VEF has 9% of Creditas equity capital, he said. 

Other investors include SoftBank, Kaszek Ventures, QED, Wellington and Advent International.

An US initial public offering is still in the plans, he said, as it increases the level of transparency and could reduce funding costs. But for that to happen, the company needs the market to be open and also needs to reach a “relevant revenue size” of about $1 billion. Furio expects both those conditions will be reached in 18 to 24 months. 

“We always prepared Creditas to be an international company,” he said. “And it doesn’t make sense to be a small international company.”

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