IDB Invest Promotes MSMEs Growth, Financial inclusion in Mexico Through Kubo Financiero

IDB Invest, a member of the IDB Group, invested the Mexican pesos equivalent of up to $10 million through redeemable preferred shares in the challenger bank Ku-bo Financiero, S.A. de C.V., S.F.P. (kubo), a deal that results in an innovative and flexible mezzanine financial structure with a 6-year term. kubo will use the funds to improve its capital structure, expand its MSMEs loan portfolio and promote financial inclusion.

Following the deal, kubo’s MSMEs and financial inclusion loan portfolio is expected to account for approximately 60% of its total portfolio at maturity. Additionally, the number and value of savings accounts are both expected to grow, supporting the development of the financial sector in Mexico.

This deal potentially contributes to three United Nations Sustainable Development Goals (SDGs): Gender Equality (SDG 5), Decent Work and Economic Growth (SDG 8) and Industry, Innovation and Infrastructure (SDG 9).

Kubo is a multi-product digital financial company with national coverage that offers savings accounts, time deposits and loans to its clients for a variety of projects, including MSMEs, housing improvements and expansion, education and health, among others.

The transaction will include an action plan to strengthen kubo's corporate governance, as well as technical assistance to develop a market study aimed at underserved segments, particularly MSMEs and clients with no credit history, supporting the development of financial products aimed at these segments. Similarly, technical assistance will focus on its data system, in order to make it more diverse and inclusive.

In addition, the transaction features a blended finance performance-based incentive from the Women Entrepreneurs Finance Initiative (We-Fi). The incentive will encourage Kubo to grow its MSME portfolio with a focus on providing financing to women-led SMEs.

Regarding this transaction, Roberto Manrique, Representative of the IDB Group in Mexico said: “This new project is the result of a beneficial partnership involving IDB Invest, IDB Lab and the IDB with kubo, for innovative development through digital transformation, generating more jobs and promoting financial inclusion and social and economic development in Mexico."

 

About IDB Invest

IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $13.1 billion in asset management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.

 

About Kubo Financiero

Founded in 2012, Ku-bo Financiero S.A. de C.V., S.F.P. (kubo) is the only 100% multi-product regulated digital finance company in Mexico. It offers savings accounts, time deposits and loans to its clients. The kubo model allows for lower interest rates for borrowers and higher rates of return for depositors and investors, compared with traditional financial institutions. Its innovative model and strategic approach aim to foster a multiplier effect in Mexico's emerging middle class through customer-centric financial services. The company has been expanding its platform, including payment solutions such as wallet and debit card, and has become a multi-product institution where clients can manage their finances in a single application. The innovative business model enables kubo to reduce operating costs and pass the benefits on to borrowers (lower rate loans) and investors (higher profitable deposits). kubo offers loans for multiple purposes: working capital for microentrepreneurs; home improvement and expansion; education; health; vehicle purchases; and family events. The products offered allow personalized loans according to clients’ needs.

 

About IDB Lab

BID Lab is the innovation laboratory of the IDB Group. We mobilize financing, knowledge and connections to catalyze innovation for inclusion in Latin America and the Caribbean. We believe that innovation is a powerful tool that can transform our region, providing unprecedented opportunities today to populations in vulnerable situations due to economic, social and environmental conditions. We develop innovative projects and early start-ups with the potential to generate impact on a large scale, we promote entrepreneurship and innovation ecosystems and we systematize and disseminate knowledge to connect ideas and scale up their impact.