Mercado Libre fintech arm snags USD 233 million from Goldman Sachs

Mercado Libre fintech Goldman Sachs
Photo: Achira22/Shutterstock

Latin American e-commerce behemoth Mercado Libre announced a new USD 233 million financing line with Goldman Sachs to boost its credit offer to buyers and sellers (consumers, entrepreneurs, and small-sized businesses) from two of its largest markets: Brazil (USD 106 million) and Mexico (USD 127 million). 

The agreement was sealed by Mercado Libre’s fintech arm Mercado Pago, and destined to its credit business, called Mercado Crédito. 

This is Goldman Sachs’s third loan to the Latin American company, having injected USD 485 million into Mercado Libre between 2021 and 2022. The deal also came almost eight months after another loan of USD 375 million with CitiBank. 

In times of post-pandemic retail downturn, Mercado Libre’s payments and credit arms have been instrumental in keeping the group growing, as they offer the company higher margins.

In Q1 2022, Mercado Libre’s net revenue rose 67.4 percent in local currency to USD 2.2 billion, with Brazil accounting for 55 percent of this increase. The results were mainly driven by the growth of Mercado Pago, the net revenue of which grew 107.9 percent year-on-year, reaching USD 971.1 million. 

In Q1, Mercado Pago had nearly 36 million active users, up by 31.1 percent. The fintech arm accounts for 45 percent of the group’s revenues in Brazil.

In a LinkedIn post, Mercado Pago’s Brazil manager Tulio Oliveira said that, in the first quarter of this year alone, “Mercado Crédito made more than USD 1.7 billion available to our users, especially supporting the underbanked population.”