Kavak, used automotive gross sales, attracts HSBC, Goldman and Santander in elevating of US$ 810 million
Even with the drop in startups globally, the Mexican company signed agreements totaling US$ 810 million in credit lines to expand vehicle inventory and financing in Latin America and Turkey.
THE Kavak, a Mexican unicorn startup that buys and sells used vehicles, has once again added to the assets at its disposal. The company, today the most valuable startup in Latin America, has just signed an agreement that adds US$ 810 million dollars for financing. The resources are from the banks HSBC, Goldman Sachs and Santanderand will be used globally in pre-owned and used car transactions.
The proposal is to use the capital to make Kavak’s complementary services more attractive to the end consumer. In addition to the digital platform and around 75 physical showrooms (or logo centers) spread across Brazil, Argentina, Mexico, Chile, Peru, Colombia and Turkey — in the last four months just over two months — Kavak bets on additional products that are part of the journey of buying and selling vehicles, such as financing.
What will the company do with the money?
With this in mind, a large part of the funds raised from banks comes through a contract for the sale of future receivables, a US$ 675 million agreement signed with HSBC. In this way, the bank becomes the acquirer of part of the financing originated by Kavak.
With Goldman and Santander, the credit line will be dedicated to expanding the inventory and the number of cars available for sale and in stock. For this front, US$ 135 million was established.
According to Moises Botello, leader of Kavak’s financial operations, the contact with the institutions has been going on for at least 18 months, which even precedes the company’s last fundraising, of US$ 700 million. “It’s a convincing job. What we’ve done over these months is to prove to these players, based on our technology, that we’ve priced vehicles properly, with algorithms robust enough to inhibit risk,” he says.
“We must ensure that we can sell them (the cars) in the right way, with the necessary confidence”, he says.
Without specific targeting the Brazilian market, a country where Kavak maintains a history of recent cost cutting, which includes the dismissal of 150 employees in 2022, the use of resources should be applied globally, reinforcing Kavak’s positioning as a leader in America Latin. “Having funding like this is our way of scaling globally,” says
The funding comes one year after the company’s last round of funding. In September 2021, the company completed a series E worth $700 million and achieved a valuation of $8.7 billion.
Work in the Middle East
Kavak maintains an aggressive expansion plan, opening four new branches in recent months. The chosen countries were Colombia, Chile, Peru and Turkey. At the time, the company said it planned to invest US$ 120 million in the Andean countries and estimated to process something like 3,000 cars a month.
In Turkey, the investment will be at least US$ 60 million in four logistics centers in the capital Istanbul, in its first foray outside Latin America. The intention is to process 300,000 vehicles by 2025.