Geru-Equity The proposed project consists of an equity investment to a FinTech financial services provider, Geru (the Company) in Brazil composed of: an equity investment of up to US$10 million for IFC's own account. Geru is a digital financial services provider offering unsecured loans for individuals in Brazil. Launched in 2015, Geru disbursed US$88m of loans in 2018 and had an outstanding loan portfolio of over US$150m as of December 2018.  Geru operates across the entire Brazilian territory and their initial core product is a fixed-term loan of US$500-$12k (avg. US$2.8k) for 12-36 months (avg. ~ 2 years).  The main purpose of the investment is to support the Companys individual financial services product and portfolio growth throughout Brazil. Stakeholder Effects: Improved quality and affordability of personal loans.  
Brazil has one of the the highest credit card penetration rates in emerging markets, with 26 percent of adults having taken a loan from a financial institution or used a credit card according to the latest Global Findex survey.  Average rates for credit cards (300 percent p.a.) and personal loans (110 percent p.a.) are amongst the highest in the world due to limits in credit data infrastructure and competition.  Through advanced analytics enabling increasingly accurate risk-based pricing, and a lean business model, Geru is able to compete with rates offered by the more competitive banks to their own account holders, offering interest rates on personal unsecured loans lower than the market average by an estimated 16-28%, without requiring any collateral deposits.  With this investment, Geru will seek to grow its customer base by leveraging technology and alternative data to further improve their credit risk underwriting, tailoring terms and expanding product offerings to consumers.  Geru loans are not earmarked for a specific use or investment, approximately 50 percent of Geru borrowers to date, states taking a loan for refinancing purposes by lowering the rates or improving product terms. Of these, a significant share are refinancing credit card debt, one of the most expensive and widespread sources of debt in the market.  2.5	Through a carefully-designed, user friendly online platform, Geru allows consumers to verify eligibility and simulate loan terms tailored to their profile with transparent disclosures. This allows platform users to compare terms with those offered by their bank, and apply for a loan in less than ten minutes. While approval is less likely for applicants flagged in the credit bureau that are typically rejected by main financial institutions, through this project Geru will invest in further developing its algorythms to better discern a customer's previous default history, as well to take advantage of the new data opportunities provided by the emergence of a positive registry and open banking regulation.  

Competitiveness
The Project will support one of the two fintech firms approved to become SCDs in Brazil, which has a business model that enables granular price differenciation for its borrowers leading to reduced costs. With the pricing being its competitive edge, Geru provides quotes of interest rates through its on-line platform, which will add a competitive pressure to other lenders, creating downward pressure on costs in the overall sector. As a leading Fintech innovator in personal finance, this way, Geru will foster competitiveness in the market by contributing to a market structure change, as it operates in a much more conducive environment. If successful, the new SCDs will grow and generate competitive pressure to the overall sector, resulting in an increased competitiveness and consequently lower borrowing costs across the market.