Given the boom in technology companies, especially those engaged in electronic commerce activities, in the context of the coronavirus pandemic, Mercado Libre announced the closure of its public offering of bonds in two tranches totaling 1,100 million of dollars.
The resources obtained will be used by the company both to consolidate its sustainability strategy, as well as to improve its debt profile.
In an interview, executives of the e-commerce platform of Argentine origin, which has a presence in 18 Latin American countries, detailed that the first part of the public offering, denominated in sustainable bonds, was for 400 million dollars, with a rate 2.375% interest maturing in 2026.
For its part, the second tranche was for an amount of 700 million dollars at an interest rate of 3.125% and maturing in 2031.
According to the company’s strategy, the sustainable bonds for 400 million dollars will be used to finance or refinance projects with environmental and social impact in Latin America.
The other tranche for $ 700 million will be used to repurchase up to half of the outstanding principal amount of a senior bond maturing in 2028.
“The company did not make an issue as a need for financing but as an organization for its financing. Mercado Libre came from a source of financing with stocks and convertible bonds … but at this stage, it sought to re-manage its debt structure, reducing convertible debt and moving to the conventional debt market, ”explained Nemesio Lozano, senior director Treasury of the company.
For Andre Chaves, senior vice president of Mercado Libre, the issuance, which was carried out mainly in the United States market with the participation of European funds, is a sign that investors are attracted to technology companies.
Opportunities
“The market is very open to technology companies, we are more perceived as a technology company, because of our market place aspect, and because of our fintech, so we have seen a lot of demand there,” explained Chaves.
The manager indicated that last year the platform presented triple-digit growth in all its indicators.
Chaves commented that the part of green bonds will have three aspects: loans for SMEs in the region through its platform; for the expansion of its fleet of electric cars, which currently numbers 70 vehicles and 15 of them are in Mexico; as well as for environmental impact projects.
“With the closure of physical stores, people began to trust more in electronic commerce, this advanced our business plan a couple of years and also advanced profitability plans … this allowed us to anticipate investment plans in logistics and credit ”, Said the Mercado Libre manager.
Regarding financing for SMEs in the Latin American region, the manager indicated that these credits will be made through the platform’s loan modality, called Mercado Crédito and Mexico will be an important piece for the spilling of resources, since the country currently represents 20 % of the company’s global business.
“There is a very large demand for credit in the region, from SMEs that do not have access to the traditional market. The advantage of Mercado Libre is the combination of having access to SMEs but also being a company with a technological DNA ”, Andre Chaves concluded.
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