Mexican buy now, pay later app Nelo lands $100 mln credit line

MEXICO CITY, Oct 19 (Reuters) - Mexican "buy now, pay later" application Nelo has received a $100 million credit facility from U.S. private equity firm Victory Park Capital, which it will use to cushion its loan book and grow its business, the company said on Wednesday.

The funding gives Nelo a boost in an increasingly crowded market, as other buy now, pay later platforms such as Kueski, Aplazo and Atrato vie to win over clients in Mexico, where credit penetration is low.

Transactions made with buy now, pay later firms, through which consumers pay in often interest-free installments over weeks or months, surged during an e-commerce boom triggered by coronavirus lockdowns.

However, analysts have since warned that an easing in consumer spending and rising interest rates could hurt the business model and force consolidation with bigger players.

With the funding, Nelo plans to cushion its loan book and free up capital to invest in employees, marketing and growth, Chief Executive Kyle Miller told Reuters.

At the moment, that growth will be within Mexico's borders, where credit card penetration is less than 12%, Miller said. "There's quite a bit of opportunity just here," he said.

In April, Nelo launched a virtual credit card with Mastercard (MA.N), which allows users to generate a one-time card for purchases through the app.

Miller said the company uses an underwriting algorithm to determine credit limits and interest rates, and checks users' credit history with Mexico's credit bureaus.

Nelo, which uses an app rather than integrated services on vendors' websites, says it has facilitated more than 3 million purchases to date with online retailers such as Walmart (WMT.N), Amazon (AMZN.O) and cell provider Telcel (AMXL.MX).

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