Bfree, a Nigerian artificial intelligence-powered digital credit collection start-up, has raised $3 million to fund its distressed loan portfolio financing across Africa.
The investment from Verdant Capital through its Hybrid Fund will be used for distressed loan portfolio financing whereby Bfree will be purchasing distressed loan portfolios from inclusive financial institutions in Africa.
In addition, Bfree will benefit from initiatives supported by the Fund’s technical assistance facility, said Verdant Capital.
In a statement, the debt equity company said distressed loan portfolio financing remains underexplored in Africa due to several factors including the lack of effective collection procedures on distressed loan portfolios, lack of accurate date for valuation of distressed loan portfolios, loan transferability issues, price variations, and ineffective judicial procedures.
As a result, it went on to say Bfree’s streamlined and principled collection services address the challenges of large-scale collections in the retail and small and medium enterprise lending sectors in Africa.
Verdant Capital, added: “Bfree is significantly contributing to the reduction of distressed loan portfolios in the financial services sector in Africa. Bfree utilises a loan portfolio pricing model which uses proprietary data to predict repayment rates for the distressed loan portfolios.”
It goes on to say since its incorporation five years ago, Bfree has experienced remarkable growth, serving over 6.6 million borrowers with an estimated loan portfolio value of over $740 million across its markets of operations.
“BFree is aiding the financial services sector by providing capital through purchasing of distressed loan portfolios that would typically have been written down to zero. This adds both capital and liquidity to financial institutions and allows them to focus on their core business of lending.
“This investment is yielding for the Fund, a return aligned with the Fund’s return target, reinforc-ing the value of supporting high-impact financial inclusion initiatives in emerging markets,” Ver-dant Capital said.
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