Zephyr Peacock-backed fintech firm MPOWER raises debt from Goldman Sachs

By Ankit Doshi

  • 19 Aug 2019

Fin-tech company MPOWER Financing Inc has raised $100 million (roughly Rs 714 crore at current exchange rates) in debt capital from US-based investment banking firm Goldman Sachs.

MPOWER, which counts private equity firm Zephyr Peacock as its backer, will use the funds to broaden its reach to students looking to study in the US and Canada.

The company had raised $100 million in loan from Community Investment Management last year, and the latest round takes its total loan financing capital to $200 million.

“This partnership with Goldman Sachs puts us one step closer to securitization of a new, global, impact-focused asset class,” said Lana Lodge, SVP - business operations, MPOWER Financing.

Besides the debt or loan capital, VCCircle exclusively reported in June 2017 that MPOWER was looking to raise about $15 million (Rs 97 crore then) in Series B round to strengthen its India presence and cater to loan growth.

MPOWER had raised $500,000 from global startup incubator 1776's venture fund, which also invested in its Series A round.

MPOWER, with other offices in Bengaluru, New York City, and Toronto, provides education loans to students to study in the US and Canada. It has ties with more than 350 top universities and colleges to provide financing to students from over 200 countries.

Since 2014, it has received over $1 billion in loan application volume on its platform. It claims to be the only company in the world to provide student loans that leverages both overseas and domestic credit data, including future earning potential, to serve high-promise international and DACA students.

Besides Zephyr and 1776 Ventures, MPOWER’s other investors include Goal Structured Solutions, Gray Matters Capital, Lloyd Crescendo Advisors, Village Capital, Potentia, Breega, VARIV, DreamIt, Fresco, Chilango, Common Sense Fund, K Street, and University Ventures.

By setting up operations in India, the company aims to better meet the education financing needs of students from the country and surrounding emerging markets.

“International students from India seeking educational opportunities in the US make up close to 25% of the student borrowers MPOWER Financing currently serves,” MPOWER Financing’s chief executive officer and co-founder Manu Smadja had told VCCircle.

Founded in 2014 by INSEAD graduates Smadja and Michael Davis, MPOWER works with 223 universities across all 50 states in the US. As of December 2016, it had approved education loans worth $10 million to close to 500 students, with an average ticket size of $18,000. MPOWER provides collateral-free financing as it lends to academically-accomplished students. It charges a fixed interest rate that's anywhere between 7.99% and 11.99% per annum.

Approximately 32% of all applications received by the company so far have been from India.MPOWER raised $6 million in its Series A round in late 2016.

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