Chile factoring player in international, product diversification strategy

A Chilean factoring company is diversifying its local footprint and expanding into Peru, citing the country’s growth potential.

Nuevo Capital, founded six years ago, currently operates in Chile, not only in the factoring sector but also in the auto financing, operating leasing, insurance broking and commodity exchange broking spheres.

In Q4, the company is scheduled to make its debut in Chile’s mortgage market, which is being supported by record-low interest rates for borrowers. It is waiting for the regulatory green light from financial services watchdog CMF.

“The most important thing we have done over the past six years is to have a long-term vision for the company, via different product lines and companies,” CEO Rodrigo Gazitúa told BNamericas.

Under the mortgage scheme, Nuevo Capital will act as a loan intermediary, processing the application and closing the deal before selling the loan on to a life insurer, which will disburse the funds and pay Nuevo Capital a commission to act as loan administrator.

Nuevo Capital, which will offer loans with terms of 10-30 years, will leverage its nationwide network of 24 branches and 460 partners.

“For the factoring industry, this is not a comparatively highly profitable business line,” said Gazitúa “At the end of the day, profit generation occurs over a period of time that is quite a lot longer than for a factoring operation, which is 30-60 days, almost immediately you could say. But it generates a high degree of portfolio loyalty.”

The company is leveraging its database of clients to cross-sell products, such as offering auto loans to factoring customers.

In the factoring segment alone, the company provided US$700mn in financing last year. The biggest player is local firm Tanner.

In the auto loan sphere, Nuevo Capital works with auto loan intermediaries in the new and used vehicle segments, including market heavyweight Amicar. 

Gazitúa said a key objective of the diversification strategy is reinforcing the message that the company has a long-term vision.

‘WE’RE HERE TO STAY’

“What I’m doing is promoting long-term loyalty,” said Gazitúa, who added that this, in turn, generates confidence among investors. “It tells investors that this company is not here to speculate in the short-term.

Today Nuevo Capital is not a factoring firm but a financial institution that offers different products on the market.”

DIGITAL TRANSFORMATION

The company is strengthening its digital muscles in house. Providing a frictionless process is vital in today’s financial services world, said Gazitúa.

“The money is the same in all institutions, the difference is in the service you provide, agility. That’s the area where you have to differentiate yourself.”

PERU INCURSION

In parallel, the company is entering Peru, where it expects to open its doors within the next 60 days or so.

Company officials will cut the ribbon on an operating leasing unit focused on the software and hardware segments, as well as a factoring company.

In the operating leasing space, Nuevo Capital will work with several global tech suppliers and in the factoring sphere with smaller, Lima-based factoring firms.

“The most important thing is that our source of financing for the two products is active and operational,” said Gazitúa.

The legal framework for factoring firms in Peru is similar to Chile’s.

Gazitúa said: “Peru is a market that we have examined closely. In terms of factoring I would say, compared with Chile, it is quite an underdeveloped market.”

Peru is home to just 20 or so factoring players - compared with around 300 in Chile - but the market is relatively big. He said: “The market is more than double that of Chile – and it has just started. And it’s got the same electronic invoicing law as Chile.

“Therefore, the market that we are familiar with here, we’re going to replicate in Peru. And with a better spread than there is in Chile.”

He added: “It’s tremendously attractive. Peru will achieve in five years what we have done in 20-25 years, because the technology is in place.”

“The other market heading along the same path is Colombia. It has the same [electronic factoring] law.”

The company is planning to enter Colombia in 2020. Gazitúa said Peru and Colombia – along with Bolivia – are also attractive auto financing markets.

Nuevo Capital is entering Peru largely in lockstep with Chilean crowdlending platform Cumplo, which expects to be up and running in the country by the end of 1Q20. Other Chilean factoring firms have already set up shop in Lima, targeting the country’s massive mining sector.

Regarding, the operating leasing market, Gazitúa said tech suppliers view Peru as a growth market, with opportunities within the large institutions segment.