Ewally in talks with foreign strategic investor to raise USD 20m to expand digital banking services, CEO says

Provided by Mergermarket

Ewally, a Brazilian provider of mobile financial services catering mostly to the unbanked and underbanked population, aims to close a USD 20m funding round by October, CEO Andre Cunha said.

The Sao Paulo-based fintech, which offers blockchain-based solutions for paying bills, transferring money, recharging cell phones and issuing credit cards, among other areas, is in intermediate talks with a foreign strategic investor, Cunha said.

The parties kicked off talks in July 2018 and the bidder is currently performing due diligence on Ewally with the support of EY, the CEO said. The fintech, for its part, works with Grant Thornton as external auditor, he added.

Despite the ongoing negotiation, the fintech has its door open to approaches from other suitors, including financial and strategic investors, Cunha said, adding that Ewally will likely pursue new funding rounds down the road.

Proceeds from the current round of financing will help Ewally strengthen its nationwide footprint by expanding its digital wallet services to end-users and increasing its white-label banking solutions to corporate clients like retailers and financial services firms, the CEO said.

The fintech also wants to use part of the capital injection to venture into other Latin American countries, he said, adding that Ewally plans to expand to Paraguay by year-end.

Ewally, which keeps its financial figures private, serves about 200,000 clients and processes BRL 50m (USD 13m) in total payments volume per year, Cunha said.

The fintech is backed by Sao Paulo-based financial services conglomerate Banco Ourinvest and private equity firm Rio Bravo Investimentos. Both sponsors have provided Ewally with a total of BRL 4.7m through two convertible-note agreements, one in May 2017 (BRL 1.5m) and the other one in July 2018 (BRL 3.2m), the CEO said.

Ewally also received a BRL 700k equity investment from an undisclosed angel investor in 2016, he noted.

Launched in 2012, the fintech joined the acceleration programs of Artemisia, focused on supporting startups in the social impact space, and InovaBra, the startup accelerator arm of Brazil’s commercial bank Banco Bradesco [B3: BBDC4], Cunha said.

Some of Ewally’s rivals in the card processing and issuing niche includes Oakland, California-based Marqeta, San Francisco-based Brex, as well as Sao Paulo-based Conductor Tecnologia, the CEO said.

Founded by two young Brazilian entrepreneurs, Brex closed a USD 100m investment round led by Menlo Park, California-based Kleiner Perkins Digital Growth Fund in June. Palo Alto, California-based Ribbit Capital, Hong Kong-based DST Global and San Francisco-based Greenoaks Capital, as well as Mountain View, California-based Y Combinator Continuity and Institutional Ventures Partners also joined the round, as reported.

Marqeta, for its part, expects to be at a size to go public in around 18 months, having raised USD 260m at a valuation of nearly USD 2bn in a Series E round led by New York-based Coatue Management in May, CEO Jason Gardner told this new service in mid-June.

And Conductor, which is backed by Menlo Park, California-based Riverwood Capital received in October a strategic minority investment from Foster City, California-based payment technology giant Visa [NYSE: V], as reported.

Ewally works with Sao Paulo-based Pinheiro Neto Advogados as legal advisor, Cunha said.

by Max Gonzales in Sao Paulo