Investor Stories: Addem Capital
Credix is more than the platform as a stand alone, it’s also a wide ecosystem of partners and collaborators. With our Investor Stories we like to put one of our liquidity providers or underwriters in the spotlight.
One of our dear partners is the team behind Addem Capital. Based out of Mexico City and with a very strong LATAM focus and expertise, Addem so far has structured and underwritten multiple deals on the Credix platform, both in Brazil as in and Mexico. We’re impressed by their track record and vision and are excited to continue working together going into 2023 and beyond.
We caught up with Luis Serio, Investor Relations Principal at Addem Capital, to learn more about Addem, their vision and collaboration with Credix. This is what he had to say…
What’s Addem Capital, and what does Addem Capital do?
In Addem Capital Group, we believe that in the medium-long term, money will become a commodity and financial players such as us, will compete with infrastructure rather than large checks. We aim to become the most relevant liquidity provider of LATAM by eliminating unnecessary debt intermediaries while reaching excellence in our underwriting and servicing processes. Addem Capital is a Mexico-based private debt fund that provides alternative structured debt facilities within five industries: fintech, energy, healthcare, real estate, and agro & sustainable foods. We create and fund tailor-made facilities for companies that contribute to strengthening the entrepreneurial ecosystem in LATAM.
Did you previously have exposure to EM financing opportunities? Which countries? How do you see this changing?
Addem Capital’s investment thesis since inception has been to be a debt provider for cash-flow- generating asset originators throughout LATAM. Today we have partnered with non-bank lenders in Mexico and Brazil. We believe attractive yields are available in LATAM due to the limited availability of capital rather than the actual risk associated with investment opportunities. The LATAM region bears an access premium rather than a risk premium when underwriting, structuring, and monitoring are done properly. With the combined strength of the Addem and Credix teams, we are entering Colombia on 1Q23; we aim to continue providing liquidity to Latam for many more years to come. We are actively monitoring other EM throughout Latam to expand our horizons in the medium-long term.
How do you compare DeFi to TradFi lending models?
Accessibility and efficiency are the key to DeFi lending models over TradFi lending. Regarding structured debt financing, DeFi has proven to be a key infrastructure piece for reducing transaction costs by enabling the reduction of unnecessary intermediaries while increasing the ability to trace cashflows and agreements in a transparent manner. All of these account for potentially higher returns, more accessible financing products, and better risk-adjusted pricing. On the other hand, TradFi lending schemes are highly regulated and rely on centralized middlemen. The availability of these services is often constrained by conventional financial regulators and factors like location, credit score, and its ability to comply with several non-related requirements. Although different, we believe both lending models have desired characteristics that when combined, can optimize for risk, efficiency, transparency, and reward.
How has your experience been working with Credix so far?
We have found in Credix a reliable business partner with the vision of a product that is much needed in order to improve the efficiency and liquidity of the LATAM institutional debt market, which needless to say, hasn’t had any major improvement in the last decades. The infrastructure they’ve built has enabled us to improve our product for both our investors and portfolio companies, as well as to improve the efficiency of some of our operating processes such as waterfall distributions.
What’s your outlook for what’s to come?
Although the funding middle-market gap in LATAM is huge, a more robust and sophisticated infrastructure around debt-related services such as monitoring, pledging, and custody, needs to be developed further to come closer to reaching its full potential. Our outlook on the region remains very positive as attractive risk-adjusted opportunities vastly outgrow liquidity sources, which enables players such as us, to cherry-pick among the different available opportunities. Default events experienced in LATAM in the past are mostly related to avoidable problems such as mismatch of asset-liabilities, poor underwriting and risk controls, and lack of decent monitoring processes. As a group that has invested through TradFi and DeFi, with certainty we can say the latter is revolutionizing the way collateral is pledged and how capital moves throughout borders. The lack of efficiency and traceability of traditional debt facilities is pushing DeFi opportunities as the benchmark even for the most old-fashioned investors in the region. Once the blockchain is fully understood by EM and the mystic that surrounds it is gone; strong, growth-focused value investment propositions will continue to strengthen LATAM EMs.
Interested in learning more or investing with Credix?
Please reach out to growth@credix.finance or join our liquidity pool here
