The Argentinian e-commerce company MercadoLibre raised $750m from PayPal and $100m from Dragoneer as part of a $1.8B equity round.
Investors across the globe are lining up to toss their cash into red-hot Latin American e-commerce markets — and MercadoLibre is in a perfect position to take their money.
Last week, SoftBank announced plans to launch a $5B innovation fund in Latin America. It’s a lot of cash, even for SoftBank. But ol’ Softy’s not alone: Funding across Latin America increased from $2.3B in 2016 to $4.3B in just a single year.
Now, global investors like PayPal and SoftBank are finally prioritizing Latin America — a region that has more internet users than the US and a GDP 2x larger than India’s.
For global investors, MercadoLibre is a safe bet: The e-commerce giant already has a market cap of $21.7B, and last year MercadoPago (the company’s payment division) increased its payment volume by 70% to $18B.
Since secondary equity offerings dilute existing stockholders’ ownership, they aren’t always a good thing. But in this case, a round of rocket-fuel could help ’Libre prevent Amazon from encroaching on its turf.
Plus, MercadoLibre has plenty of room to grow: There are still more than 400m consumers across Latin America who don’t have bank accounts or credit histories. As they rapidly enter the market, e-commerce will only grow more quickly.