Planet42, an Estonian-founded and South African-based car rental firm, has launched a $100 million financing to expand its operations throughout South Africa and Mexico.

According to CEO Eerik Oja, the investment consists of $15 million in stock from new and current owners such as Naspers Limited, Andrew Rolfe, and Change Ventures, $10 million in debt from shareholders, and a $75 million credit facility from Rivonia Road Capital.

The funds will be used to expand the company’s activities in South Africa and to speed its entry into the Mexican market.

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“In South Africa, we want to put the pedal to the metal using this new financing to quickly add about 10,000 more cars to the fleet,” said Oja. “In Mexico we are exploring where best to find customers, and how to switch on dealerships, so it takes time to get the ball rolling, but we have started to test the market and have about 250 cars that side.”

He added that they chose the Mexican market because of the parallels they discovered between the country’s operational climate and that of South Africa.

“It’s very similar to South Africa in terms of income and car penetration and development or lack thereof, of financial services,” Oja added. “Plus public transportation there is slow, unreliable and dangerous, opening up a big market opportunity.”

A Look At What The Startup Does

Planet42 scores a customer’s risk level and generates an offer to buy a car from a dealership of choice in minutes using proprietary algorithms and data points. The firm claims to have around a thousand vehicle dealerships in its network, which accounts for approximately 40% of its sales.

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Planet42 also says that their product promotes mobility inclusion in South Africa by filling the gap created by the country’s main banks, which are risk adverse in granting loans to clients to enable them to buy their own automobiles, as well as solving the issue of unreliable public transportation.

Planet42’s managing director, Grant Wing, indicated that the company’s goal was to grab around 1% of the used automobile market each year, which equated to approximately 200,000 cars in total fleet size. The $100 million will be useful in doing this.

The global car rental market was worth $119.28 billion in 2021 and is expected to reach $223.07 billion by 2027, with a cumulative annual growth rate (CAGR) of more than 11% during the forecast period, according to Mordor Intelligence’s Car Rental Market — Growth, Trends, COVID-19 Impact, and Forecasts (2022–2027) report (2022–2027).

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Despite the fact that the study classifies Africa, along with South America and the Middle East, as a “low-growth” region in the sector, with $100 million in the bank, it appears that Planet42 and its investors are counting on the industry’s positive growth in Africa over the next several years.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Planet42, South Africa’s car subscription company that helps the unbanked to get access to personal vehicles has raised a US$10 million debt funding round to help it scale its operations and expand beyond South Africa to other markets across Africa. Planet42 was launched as CarGet in 2017, Planet42 partners with dealerships across South Africa to offer access to a personal car to its largely underbanked clientele. It uses an automated scoring algorithm to process client applications based on credit bureau, affordability, and alternative data. If the application is approved, Planet42 analyses the customer’s validation documents before purchasing the car from the dealership and renting it to the customer. The asset is secured with tracking technology, as well as comprehensive and mechanical insurance.

To date, Planet 42 has bought and delivered over 2,000 second-hand cars in South Africa, and it now plans to purchase 100,000 cars by 2024 after raising US$10 million from the US-based Lendable Inc, an institutional debt investor. The company is also considering options to expand into other emerging markets, and plans to raise a Series A round in 2021.

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Speaking on the startups plans for expansion, the co-founder and CEO of Planet42, Eerik Oja, said that “our ambition is to make mobility accessible to everyone who can afford it, including the people that banks deem “blacklisted”, which comprise more than 90 per cent of our clientele. We’ve already signed up over 300 car dealerships across South Africa, but there are still several thousand to go. And that’s just the first market we have tackled. This round will open more doors in South Africa and beyond for us.”

The US$10 million debt financing follows a US$2.4 million seed raise earlier this year, in a round led by Change Ventures, and takes the total amount of capital raised to US$20 million. The debt facility reduces the relative cost base of Planet42, enabling the company to pass savings onto its customers and make the product accessible to even more people. Because Planet42 owns the vehicles and generates predictable revenues from its fleet, it is in a position to raise significant debt financing.

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“Planet42 has proved its ability to grow even through the current pandemic. We fully share their mission of improving people’s lives through access to mobility, and are thrilled to provide backing to expand Planet42’s impact in South Africa,” said Hani Ibrahim, chief investment officer at Lendable.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Apparently, Estonian investors may have well understood the African mobility market. The game now may be not to go after the public transport sector or to launch another ride-hailing startup. Arising from the $109 million investment secured by their fellow national company, Bolt (formerly Taxify) to invade the African market, South Africa-based Estonian startup Planet42, which in June this year, raised over $2.4 million to conquer the South African mobility market, has again secured US$10 million debt funding round to move into new markets.

“Our ambition is to make mobility accessible to everyone who can afford it, including the people that banks deem “blacklisted”, which comprise more than 90 per cent of our clientele. We’ve already signed up over 300 car dealerships across South Africa, but there are still several thousand to go. And that’s just the first market we have tackled. This round will open more doors in South Africa and beyond for us,” said Eerik Oja, the chief executive officer (CEO) and co-founder of Planet42.

Here Is What You Need To Know

• The US$10 million debt financing came from the US-based Lendable Inc, an institutional debt investor.
• This means that the total amount now raised by the startup is now US$20 million. The startup also has plans to raise a Series A round in 2021.
• With the financing, the company plans to expand into other emerging markets. 
• The debt facility reduces the relative cost base of Planet42, enabling the company to pass savings onto its customers and make the product accessible to even more people. 
• Because Planet42 owns the vehicles and generates predictable revenues from its fleet, it is in a position to raise significant debt financing.

Why The Investor Invested

“Planet42 has proved its ability to grow even through the current pandemic. We fully share their mission of improving people’s lives through access to mobility, and are thrilled to provide backing to expand Planet42’s impact in South Africa,” said Hani Ibrahim, chief investment officer at Lendable.

The co-founders have previously long been working in investment firms, hence the relative ease and deep connection in the industry. One of the co-founders, Marten Orgna also has a long history of the South African mobility space, hence the investors’ trust in the capacity of the team to execute.

Planet42 debt funding Planet42 debt funding

Read also: After Bolt, Another Estonian Startup Planet42 Raises $2.4m To Allow South Africans Own Cars

A Look At What Planet42 Does

Planet42 originally launched as CarGet in 2017 to service South Africa, a market well-known to co-founder and CFO Marten Orgna, who ran African Investments for Trigon Capital. The startup partners with dealerships across South Africa to offer access to cars for personal use to its largely underbanked clientele (9 out of 10 of customers).

Planet42 uses an automated scoring algorithm to process client applications based on credit bureau, affordability, and alternative data.

If the application is approved, Planet42 analyses the customer’s validation documents, such as IDs, payslips and bank statements before purchasing the car from the dealership and renting it to the customer.

The asset is secured with tracking technology, as well as comprehensive and mechanical insurance. So far Planet42 has bought and delivered over 2,000 second-hand cars in South Africa, and it now plans to purchase 100,000 cars by 2024.

“We grew eight-fold in 2019 and we had our strongest month to date in April, despite the ongoing crisis. We see a huge need for people to improve their standards of living with better mobility, but a lack of options in the market to service them. More than 24 million people are credit impaired or have no access to finance in South Africa — that’s well over half of the adult population,” explains co-founder and CEO Oja, who gained experience in the alternative vehicle financing space as Country Manager for Mogo Finance in Estonia.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer