Ualá reaches US$2.75-billion valuation in new funding

Argentine fintech company Ualá has raised US$300 million from investors at a valuation of US$2.75 billion, the latest funding haul for one of the most valuable start-ups in Latin America.

The Series E round was led by Allianz X, the venture capital arm of Germany’s insurance giant Allianz SE, which hadn’t invested in Latin America previously.

Other new investors include Stone Ridge Holdings Group, Bill Ackman’s Pershing Square Holdings, billionaire Alan Howard, Mexican family office Rodina and Claure Group.

Existing investors such as George Soros’ Soros Fund Management, Goldman Sachs Group Inc, SoftBank Group Corp and Tencent Holdings Ltd also participated in the round.

“We’re going to use this to scale Argentina, where my goal is to be the largest bank in the country, not just by users but by book,” founder and Chief Executive Officer Pierpaolo Barbieri said in an interview.

As it expands, Ualá “does not rule out” growth in other markets, and is open to acquisitions, the CEO said. The funds will also be used “for the expansion of business units in both Mexico and in Colombia.”

The company was last valued at US$2.45 billion after a US$350-million funding round in 2021.

Barbieri said the increased valuation in the latest round “shows confidence” in Ualá’s potential, adding, “We’re very proud to be able to show leadership in the region.” The company will seek to be profitable in all markets before eyeing an initial public offering in the US, he said.

The funding round comes amid a challenging environment for Latin American start-ups, with investors staying on the sidelines as interest rates in the US remain high relative recent years. The region saw limited VC dealmaking in the third quarter and relatively few recent acquisitions or new public offerings, according to data from PitchBook.

Regional reach

Ualá, the largest start-up in Argentina, has eight million users. About six million of those are located in its home country, a user base that represents more than 17 percent of Argentina’s adult population. Launched in 2017 with a debit card, the company now offers a series of products including payments, credit, merchant acquiring and investments. Most recently, demand has been “crazy” for dollar-denominated accounts, Barbieri said, with 100,000 account openings in the first five days of the offering, even though only half a million users were given the option.

President Javier Milei attended the announcement at the company’s newly-inaugurated headquarters in the Palermo neighbourhood of Buenos Aires. Of Ualá’s 1,500 employees, about 1,000 are located in Argentina.

The company is looking into Milei’s investment incentive plan, known as RIGI, and Barbieri said he expects the company will qualify for the incentives, but declined to give details.

Barbieri also highlighted the potential of Mexico’s market, where the company operates with a banking license since it received regulator approval in 2023, and where it expects to eventually do more business than it does in Argentina. Barbieri said that Ualá would continue to provide a high yield on savings accounts, a tool that’s become a popular way for fintechs to lure savers in Mexico.

“What has been difficult is to underwrite credit in Mexico to people that don’t have a credit history,” he said. “In our case, we’re debit first and we use that data, plus cellphone data, bill-payment data, remittance data and merchant acquiring data to build our own score and underwrite credit.”

The company will also look to expand its offerings in Colombia, where it has about 700,000 users, but is still adding services. “The rate of growth there has been lower because the product suite is not yet complete,” Barbieri said.

The partnership with Allianz also will open space for Ualá to unlock opportunities in insurtech, according to a press release.

“Our investment in Ualá offers both financial and strategic partnership opportunities, which can enable us jointly to penetrate new customer segments, capitalize on growth opportunities, and enhance customer experience,” Allianz X Chief Executive Officer Nazim Cetin said.