Egyptian Buy Now, Pay Later (BNPL) platform valU has closed a securitised bond issuance valued at EGP 735 million ($15.5m). The transaction marks the fintech’s 19th issuance to date and the third tranche under its current approved securitisation programme.

While early-stage startups across the MENA region struggle with a liquidity crunch in venture capital, valU is leveraging its relationship with parent company EFG Holding to tap into debt capital markets. The move reinforces a strategy of capital recycling — using the company’s own loan book to generate immediate liquidity rather than diluting equity holders.

The Transaction Mechanics

The bond issuance serves as a mechanism to offload risk and free up capital for new lending. The transaction carries a tenor of 17 months and is backed by a receivables portfolio — effectively the consumer debt owed to valU — assigned to EFG for Securitisation, a special purpose vehicle (SPV).

The issuance was split into two fixed-rate tranches to appeal to different risk profiles among investors:

• Tranche A: Valued at EGP 621.1m ($13.1m) with a 12-month maturity. It received a P1 (sf) rating, indicating strong creditworthiness.
• Tranche B: Valued at EGP 113.9m ($2.4m) with a 17-month maturity. This tranche holds a rating of A- (sf).

EFG Hermes acted as the sole financial advisor, transaction manager, bookrunner, underwriter, and arranger. Arab African International Bank served as underwriter and custodian, with Dreny & Partners acting as legal advisor and Baker Tilly as auditor.

The Securitisation Engine

This transaction follows a separate EGP 460.7m ($9.2m) bond issuance closed in August, highlighting the quarterly cadence of valU’s funding operations. This high-frequency fundraising is part of a broader EGP 10bn ($200m) securitisation programme approved by regulators.

For fintech lenders, securitisation offers a “flywheel” effect that venture debt or equity cannot provide efficiently:

1. Origination: valU issues loans to consumers.
2. Bundling: These loans are bundled into a portfolio.
3. Sale: The portfolio is sold to investors as bonds, providing valU with immediate cash.
4. Re-deployment: The cash is used to fund new loans without waiting for customers to pay monthly instalments.

Since 2021, valU has raised over EGP 12.3bn ($246m) through this method.

ValU’s trajectory offers a case study in corporate-backed venture building. Launched in 2017, the company has transitioned from a department within an investment bank to a dominant market player.