South African fintech Yoco, co-founded by tycoon Katlego Maphai, secures $100 million credit line

South African payments company Yoco, co-founded by tycoon Katlego Maphai, has secured a $100 million credit facility from US investor Victory Park Capital Advisors, its first move into the debt market as it scales up lending to small businesses.

The facility, worth about R1.6 billion, will fund cash advances to Yoco’s merchants, BusinessTech reported, citing Bloomberg. Chicago-based Victory Park manages about $3.6 billion and has invested more than $12 billion across 260 deals since 2007.

The deal gives the Cape Town company more control over a fast-growing part of its business. Until now, Yoco has provided financing to merchants through partners, disbursing R6.5 billion ($406 million) that way.

The facility will “give Yoco direct control over the financing needs for our merchants at scale,” Chief Executive Carsten Höltkemeyer said.

Advances will range from R2,000 ($125) to R1.5 million ($94,000). Merchants receive the money instantly and repay it through automatic deductions from their daily card sales, a model that lets Yoco collect as its customers earn. Business owners typically use the funds for staff, stock, equipment and new branches.

The move targets a large gap. A Finfind Access to Finance report puts South Africa’s small-business funding shortfall at about R350 billion ($21.9 billion), as banks remain cautious about lending to informal and early-stage traders.

Yoco has grown into one of South Africa’s best-known fintech companies since it was founded in 2015. It now serves about 200,000 merchants, handles payments from 30 million consumers a year and has processed more than $15 billion in total payments.

The company has raised more than $150 million in equity from investors including TPG and Dragoneer Investment Group, according to BusinessTech. Dragoneer led its $83 million Series C round in 2021, and its most recent estimated valuation was about $700 million.

The credit facility is one of the first big moves under Höltkemeyer, a former Barclaycard Germany chief and head of Berlin-based embedded finance group Solaris. Billionaires.Africa reported in June that he became Yoco’s first outside chief executive on June 1, after Maphai stepped down from the role he had held for a decade.

Maphai, who previously worked at Rocket Internet and helped set up Jumia in Nigeria, remains engaged on strategy. His fellow co-founders also remain in senior roles. Carl Wazen is chief business officer, Lungisa Matshoba is chief product and technology officer and Bradley Wattrus is chief financial officer.

The financing comes as competition intensifies in South African payments. Banks, telecom operators and retailers are all pushing deeper into merchant services and small-business credit, and lending has become an important source of revenue for payment companies whose transaction fees face pressure.

Meanwhile, debt funding allows Yoco to expand lending without diluting its shareholders, a growing preference among African fintech companies after a slowdown in venture capital.

As a result, the facility turns Yoco from a payments processor that refers loans into a direct lender, a shift that could define its next stage of growth.