JPMorgan and IFC Invest $27 Million in Colombian Fintech

JPMorgan Chase & Co. and International Finance Corp. are investing $27 million in KLYM, a data-driven fintech company that provides working capital to small and midsize companies in Latin America.

KLYM plans to use the capital to expand its operations, with Brazil as the main priority in 2023, Diego Caicedo, co-founder and chief executive officer of Bogota-based KLYM, said in an interview. The firm, which was formerly known as OmniLatam, plans to expand its operations in Colombia and Chile as well, and is working with regulators to start a business in Mexico.

"This investment will deepen our partnership with JPMorgan," Caicedo said. "Now that they are going to be equity holders in the company, it will solidify our relationship for the long term."

JPMorgan is seeking partnerships to offer digital banking services to retail customers as well as small and midsize companies outside the US. In addition to a minority stake at KLYM, the New York-based bank has previously invested in two Brazilian firms. In June 2021, it agreed to buy 40% of Sao Paulo-based digital bank C6 after acquiring equity in another Brazilian fintech, FitBank Pagamentos Eletronicos SA, a year earlier. These investments underscore JPMorgan's commitment to expanding its reach in the digital banking space and providing innovative solutions to its customers.

KLYM has had a strategic alliance with JPMorgan since the middle of last year that enables the fintech to obtain funding in dollars, euros and other currencies, and to do trade finance. KLYM is able to offer its clients more flexible financing options and better terms thanks to this partnership.

"Cross-border supply-chain finance is a capability that few fintechs have because it is very expensive to build a bank in Europe or the US to do this," Caicedo said.

The company has received mandates from Brazilian companies in the agricultural, pharmaceutical and biofuel industries, with financing expected to reach $1 billion in 2023. KLYM can finance suppliers in 32 jurisdictions, including China, and supports 25 different currencies. This makes it an attractive option for companies looking to do business in Brazil.

Caicedo said that the firm offers receivables finance and working capital in general. It collects data such as invoices and tax forms to help make credit decisions based on the prospective borrower's clients, sales and employees.

KLYM has hired Alexandre Mandel, a former director at Mitsubishi UFJ Financial Group Inc. in Brazil, to lead its operation there. The firm plans to hire 80 workers in Brazil in 2023, ending the year with about 100 employees in the country. Including Colombia and Chile, KLYM will have more than 400 employees.

A new regulation in Mexico requiring digital payments can also help KLYM, as its platform can be used for that.

"KLYM is changing the trade-financing market architecture by introducing operational efficiencies that make it easier for small and midsize companies to access financing," Elizabeth Martinez de Marcano, IFC's country manager for Colombia, said in a statement.

OmniLatam was founded in 2017 by Caicedo and his partner, Andres Abumohor. In June 2020, it was purchased by Greensill Capital. Just eight months later, Greensill Capital filed for administration in the UK after a stunning collapse that shook the global financial community. In May 2021, Caicedo and Abumohor bought the region’s operations back with the help of the Miami-based investment firm 777 Partners.

This round of funding has secured $95 million in equity for the company since it was founded. Caicedo plans to raise more capital this year, and estimates that the company will become profitable after revenue quadrupled last year, to $25 million. KLYM has a $170 million credit portfolio and handled more than $700 million in loans in 2022.