In a recent announcement, Axa Credit, the credit branch of Axa Assurance Maroc has been acquired by Moroccan B2B e-commerce and retail startupChari for USD 22 million.
Chari was valued at USD 100 million after the extension of its seed funding round, and has started offering BNPL services to its customers. Publicly disclosing its valuation, Chari is one of very few African companies to do so.
Chari offers digital services in French-speaking African regions, especially Morocco and Tunisia. In these two countries, the company runs a mobile application connecting small retailers to manufacturers and multinational FMCG firms, allowing the retailers to order and receive products within 24 hours.
In October last year, Moroccan credit book firm Karny.ma was acquired by the YC-backed Chari. The platform offers credit and book-keeping services to over 50,000 merchants, thereby allowing the merchants to manage the credit they offer to their customers.
Chari the only start-up in the region to acquire the local branch of global bank Axa
Chari is possibly the only start-up in the region to acquire the local branch of a global bank. Axa credit is the Moroccan credit division of France-based Axa Group. However, the acquisition is still pending approval from Moroccan insurance, banking and regulatory authorities, stated the company.
The CEO of Chari, Ismail Belkhayat mentioned that since Axa was retreating from its Moroccan credit business, it saw Chari as fit to take over the business.
Stating that he felt Axa believed that Chari was a company able to achieve financial inclusion, the CEO, also the founder of Chari, was joined by his wife and COO, Sophia Ali who echoed the sentiment.
Seventy percent of the population of Morocco are unbanked, underbanked, or unable to show proof of recurring income. Accessibility to loans is a hurdle for this section of the population, since lending banks require proof and stability of income, while many people in this segment do not even operate a bank account.
When asked how Chari intends to address the needs of this population, including lending to them and getting reimbursed, Belkhayat replied that the solution lay in the acquisition of Karny.
Shop owners and merchants in Morocco often give small loans to their customers. Karny ascts as a tool and interface to track money movement in and out of these businesses. With the acquisition of Karny, Chari will be able to access important data on the loans that merchants underwrite to their customer base.
The acquisition of Axa credit will provide Chari the operating license needed to offer loans to its B2B clients, who in turn will offer loans to their customers. In essence, Chari will adopt a B2B2C operating model for its credit line.
Chari reasons that merchants are aware of the spending habits of their customers intimately, including when they are paid. This allows the shop owner the chance to perform a credit risk assessment that regular banks are unable to do. The CEO mentioned that they intend to turn shop owners into lending agents, who will do their own credit assessments of their customers.
In addition to offering loans to its customers, small merchants can also offer FMCG on a credit basis. With this system, Chari feels that the underbanked section of the population will be able to operate on a level field with those sections of the population who have bank accounts.
Belkhayat said the acquisition money for the deal comprised a combination of seed financing, local debt from banks, and negative working capital from transactions with manufacturers. The company is also readying itself for a large Series A funding round.
