Lhoopa, a Philippine-based property technology (proptech) start-up has raised US$80 million in fresh funding from key investors, through a combination of equity and debt, in a transaction that represents the biggest funding raise for a Philippine start-up to date.
The funds will be used to expand Lhoopa’s footprint in the Philippines by providing its clients with green housing options, while also hiring and expanding into other developing economies in Southeast Asia.
With regard to the funds, US$20 million were in the form of equity, which was co-led by the International Finance Corporation (IFC), the World Bank’s private lending arm, and Wavemaker Partners, as well as Pavilion Capital, 10X Group, Concentric Equity Partners, UAE-based Mirath Investments, US-based NataRock Partners Fund and Black Kite Capital.
Individual investors also include Steve Melhuish, co-founder of PropertyGuru Group and founding partner of Wavemaker Impact, and Ron Hose, co-founder of Philippine-based Coins.ph, while existing investors Patamar Capital and Tekton Ventures also joined the new round.
The equity round, the start-up notes, then facilitated the commitment of US$60 million worth of debt facilities, which will be from development finance institutions, including the Asian Development Bank (ADB) and the United States International Development Finance Corporation as well as Lendable, the United Kingdom-based provider of debt to fintechs in emerging markets.
“This funding marks a pivotal moment for Lhoopa as we scale our operations to meet the growing demand for affordable housing in Southeast Asia,” says Marc-Olivier Caillot, the start-up’s founder. “With the support of our investors and financing partners, we are poised to make a significant impact on the affordable housing market and improve the lives of countless deserving families.”
Lhoopa, founded in 2018, enables the large-scale development of affordable homes in the Philippines by leveraging data and technology, and engaging stakeholders through a decentralized approach. To date, the proptech has sold over 2,500 homes in more than 58 cities in the Philippines.
With the fresh funding, the start-up hopes to provide, over the next three years, another 15,000 affordable homes to those who need them.
The start-up’s mission, states Sabrina Tan, its president and co-founder, is to solve the problem of affordable housing and provide access and opportunities for financial growth to local partners; and the fresh funding, she emphasizes, will enable the company to accelerate these efforts.
In the Philippines, the start-up’s data show, there is a 6,5 million housing backlog, and this number is expected to balloon to 22 million by 2040.
While affordable housing is “not typically seen as a venture play”, Paul Santos, managing partner at Wavemaker Partners, says that his company believes that Lhoopa is uniquely positioned to solve a long-standing problem while still being a viable business.
“Lhoopa,” he points out, “is demonstrating that with boldness, innovation and differentiated execution, affordable housing can be both profitable and impactful.”
The strategic partnership between Lhoopa and the ADB, notes Suzanne Gaboury, the ADB’s director-general of private sector operations, is in line with the two institutions’ shared vision for poverty reduction and sustainability.
Under the financing structure with the ADB, start-up gains access to a revolving facility with credit limit step-ups linked to performance.
“[This structure] is tailored to the unique business needs of a rapidly expanding company,” Gaboury adds. “This is also the ADB’s first affordable housing transaction with the private sector in the Philippines.”
