Invalda INVL : Mundus Bridge Finance will acquire up to EUR 7 million of...

The Mundus Bridge Finance private debt fund has signed a 3-year agreement with Finto Capital, a Latvian consumer financing company, on the acquisition of EUR 7 million of bonds. During the signing of the agreement, the fund concluded a first transaction to acquire bonds with a value of EUR 830,000.

Finto Capital provides used car leasing and leaseback services to private individuals in Latvia. The company focuses on customers with stable incomes who wish to buy a used car for a price of up to EUR 15,000. Finto Capital's loan portfolio currently has a value of EUR 2 million before provisions.

"The company has optimised its processes in active operations over the last 5 years and its management has the experience needed to grow sustainably and capture significant market share in the future. The company's conservative risk management and its business model based on IT solutions are important factors that make the investment attractive to participants of the Mundus Bridge Finance fund," says Martynas Grikinis, a Partner at Mundus.

Finto Capital's distinct competitive advantage in the market is an IT system it has developed in-house which integrates a network of partners involved in the car trade. When a potential customer chooses a car at a dealership, they can ask the partners to submit an application for financing directly. Thanks to an automated system for assessing customer creditworthiness and car value, Finto Capital makes a financing decision within just 15 minutes. That ensures a smooth and rapid loan origination process and helps reduce operating costs.

"The stricter regulatory environment in Latvia has helped consolidate a prudent long-term non-bank leasing-company business model and high performance standards, which have helped stabilise the financing market for cars more than 5 years old, while bank financing in the automotive segment has not changed and remains limited. We have successfully refined the company's business processes and see potential in the market, so working with the Mundus Bridge Finance fund, which has a lot of professional experience with the specifics of the consumer loan market, will provide us with stability as we increase financing volumes in this segment of the market," says Rihards Behmanis, the founder of Finto Capital.

In 2019, Latvia launched a regulatory reform of the consumer credit market, one element of which is higher capital requirements for a license to operate. Despite the more challenging operating environment, the market value of the portfolio of non-bank leasing companies' loans has grown consistently year on year and the quality of the portfolio has steadily improved. Finto Capital's preliminary data show that at the end of 2021, the portfolio of such loans had a total value of EUR 48 million and had grown 9.5% over the previous 12 months.

Mundus Bridge Finance, an open-ended fund for informed investors, seeks a stable long-term return by providing bridge financing for projects of various types and investing in private debt securities of companies in the fast-growing alternative finance sector. The fund is managed by the Mundus asset management company. Since its launch in 2015, the fund has completed 19 transactions and its assets under management exceed EUR 26 million.

INVL Asset Management, a part of the leading investment management and life insurance group in the Baltic region, has held a controlling stake in Mundus since February 2018. Following the completion of an agreement which has been signed, INVL Asset Management will own 100% of Mundus's shares.

About the INVL group

INVL is the leading investment management and life insurance group in the Baltic region. Its companies manage pension and mutual funds and life insurance directions, individual portfolios, private equity, and other alternative investments. Over 300,000 clients in Lithuania, Latvia and Estonia and international investors have entrusted the group's companies with the management of more than EUR 1.75 billion of assets. In the business for more than 30 years now, the group has solid experience in managing private equity assets and building market players that are leaders in their respective fields in the Baltic countries and Central and Eastern Europe.