Covalto to become Mexico’s first US-listed fintech following SPAC merger

Mexican SME-focused digital banking platform Covalto is set to go public via a merger with special purpose acquisition company (SPAC) LIV Capital Acquisition Corp.

Covalto will be the first US-listed Mexican fintech

The new combined entity will be named Covalto and, listed on Nasdaq, will be the first Mexican fintech to publicly trade on a US stock exchange.

The merger values Covalto at $547 million and will generate up to $177 million of capital before expenses.

The deal will also see LIV Capital commit financing of $60 million, which will enable the firm to continue its growth trajectory, expand its suite of products and scout for M&A opportunities in Mexico and Latin America.

Formerly known as Credijusto, Covalto provides “a one-stop solution for SMEs”, providing credit products, banking services and a full suite of business analytics tools to support the financial needs of thousands of businesses.

Covalto co-CEO David Poritz says: “Due to limited innovation and the outdated technology of incumbent banks, SMEs in Mexico are insufficiently integrated into the modern banking system and are not able to fully access the world’s growing digital economy.

“We built Covalto to address this challenge and unlock the potential of Latin American SMEs via digital banking and credit solutions.”

Last year, Covalto became the first Mexican fintech to acquire a regulated bank, providing the company direct access to Mexico’s interbank payment system and significantly lowering its cost of funding.

LIV Capital raised $114.5 million in its initial public offering on 7 February 2022, with a view to combine with a technology business operating in a “high-growth and underserved segment in Mexico”.

Its chair and CEO Alex Rossie says: “The convergence of financial services and technology is driving disruption in the Mexican market, and Covalto is at the forefront of this trend.”