January 11, 2017

FINAE

From start-up to leading Mexican education finance company

Investment highlights

FINAE provides loans to university-level students from low- and middle-income households. With Bamboo’s strategic and financial support, it has developed into a mature, profitable company, to date lending over $50m

  • Pre-2009: FINAE was a small financial company, with no institutional investors, lending to just 200 students at four universities
  • 2009-2011: Bamboo invested $1m in equity and $1m in a 5yr non-collateralized load. That enabled FINAE to leverage additional growth funds. It secured a $2m loan from IADB in 2010, and started to get local currency funding from commercial banks at variable rates, so reducing interest risk.
  • 2012: Bamboo extended a $3m convertible loan, of which $1m converted to equity in 2013. FINAE raised $2m in equity from reputable Mexican funds Adobe Capital (pioneer impact investor in Mexico) and Mexico Ventures (government-backed fund)
  • 2013: FINAE completed the first portfolio securitization in education in Latin America, rated AAA by HR Ratings and oversubscribed. This boosted growth and secured low-cost funding. FINAE also strengthened the management team, hiring its first CFO.
  • 2014-15: Top-class international funds Elevar and Omidyar invested; the Board hired an independent, professional CEO and created audit and risk committees. Second securitization ($14m) at a low variable rate, allowing repayment of more expensive debt. Based on its positive track record, FINAE approached by international players to export its model to other Latam countries, and Bamboo helped scout the Colombian and Peruvian markets.

Bamboo’s focus and added value

Bamboo was FINAE’s first institutional investor and has advised on most strategic decisions and processes since 2009. It has provided investment banking advisory and services during debt and capital raisings totalling $4.8m (equity) and over $20m in debt (to end 2016).

Bamboo helped improve governance, from the drafting of investors’ agreements to the creation of key board committees and the leadership transition

FINAE now operates in 83 university campuses, has served over 10K students, of which 34% belong to low-income families. SROI (Social Return on Investment) analysis concluded that for every $1 invested in FINAE, the social return is $3.16.