Knowledge

Author: MacDonald Gomo

Category:

Date: 11 December 2020

Verdant Capital raises USD 10 million of debt funding for Planet42 to provide alternative finance through its Rent-To-Buy model

Planet42

Planet42 is an innovative car subscription company that helps individuals ignored by banks to get access to a personal vehicle. To date, Planet 42 has bought and delivered over 2 000 second-hand cars in South Africa, its primary market. The debt capital raise, which follows an equity capital raise of approx. USD 3 million earlier in the year will help the company get many more South African mobile.

Its Rent-To-Buy product is a flexible alternative to traditional finance for individuals who do not have access to financing from banks as a result of stringent lending policies. Planet42 signs motor vehicle dealers as partners to get access to their clientele via their own custom-built website. The company purchases the car from the dealership and rents it to the customer on a subscription basis. The assets are secured with tracking technology, as well as comprehensive and mechanical insurance.

Compared to Europe and North America, personal vehicle ownership in Africa, Latin America and Asia is far lower. Banks in these regions approach risk assessment conservatively, viewing the majority of the population, even those with a stable income, as unworthy of financing for a personal vehicle. Instead, these banks focus on easy-to-assess, wealthier customers and newer cars.

To compound this issue, in South Africa, like many emerging economies public transport is often lacking or dysfunctional. People who do not own a personal vehicle often face disadvantages when it comes to education and employment options, making it harder to build wealth. This, in turn, makes them less creditworthy in the eyes of the banks. Planet42’s mission and vision is to break this vicious cycle of financial exclusion by providing accessible personal vehicles on a subscription basis and helping to unlock social mobility with increased physical mobility.

Planet42 aims to use the new backing to scale its South African operations with the goal of purchasing 100 000 cars by 2024. The company is also considering options to expand into other emerging markets and plans to raise a Series A round in 2021.

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