Mexican fintech Covalto has signed a merger agreement with LIV Capital Acquisition Corp. II (LIVB), which will result in Covalto becoming a US-listed company.
LIVB, a unit of Mexico City-based fund LIV Capital, is a special purpose acquisition company (SPAC).
The deal is expected to take Covalto at an implied $547m pro-forma value and add up to $177m of capital before expenses.
It also includes a financing commitment of $60m, $30m of which has already been fulfilled and the remaining $30m will be provided by the SPAC’s parent following this announcement.
Covalto plans to use the proceeds to drive growth, expand its product portfolio, and explore merger and acquisition opportunities in Mexico and Latin America.
This marks the first time a Mexican fintech’s shares will trade publicly on a US stock exchange.
Founded in 2015, Covalto provides digital banking and services platform, with a focus on small and medium-sized enterprises.
Its product suite includes lending, digital banking and business analytics solutions for SMEs.
LIVB chairman & CEO Alex Rossi said: “The convergence of financial services and technology is driving disruption in the Mexican market, and Covalto is at the forefront of this trend.
“We are partnering with an exceptional management team which has built a leading digital banking and financial services platform in Mexico, addressing the significant SME credit opportunity in the region.”
Covalto co-CEO and co-founder David Poritz said: “Due to limited innovation and the outdated technology of incumbent banks, SMEs in Mexico are insufficiently integrated into the modern banking system and are not able to fully access the world’s growing digital economy.
“We built Covalto to address this challenge and unlock the potential of Latin American SMEs via digital banking and credit solutions.”
Covalto and LIVB board of directors have approved the transaction, which is anticipated to close in the first quarter of 2023, subject to other closing conditions.