Chari, a Moroccan B2B e-commerce and retail startup, has acquired Axa Credit, the credit arm of Axa Assurance Maroc, for $22 million.

This acquisition came after the startup closed a bridge round that bumped its valuation to $100 million and empowered it to start its buy-now-pay-later (BNPL) offerings to its customers. 

Chari is gradually becoming a startup that’s pioneering a new culture in the region: besides being the first to openly declare a valuation below the usual unicorn status, it’s also the first startup in the region to acquire a subsidiary of a global financial institution, which is a rare deal even in the west. 

Cofounded by the Moroccan couple Ismael Belkhayat and Sophia Alj, Chari is a platform that connects smallholding shops to FMCGs and other manufacturers and allows them to order products that are delivered within 24hours. The company is currently operational in Morocco and Tunisia, with the ultimate goal of expanding into every Francophone African country in the coming years. 

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Axa Assurance Maroc is selling off Axa Credit, its loan subsidiary, because it wants to concentrate on its insurance offering. Many companies bidded to acquire Axa Credit but the Y Combinator-backed startup won because its values aligned with that which the France-based bank had envisioned for its credit arm—to promote financial inclusion in the country. 

Although Chari said in a statement that the acquisition is still subject to approval from the Moroccan banking, insurance and antitrust authorities, one question that lingers is how is a 2-year-old company that has only raised about $7 million capital able to buy a credit arm of a bank?

“We are buying it in cash, using our seed funding, venture debt funds, and our negative working capital to pull the deal through,” Belkhayat told TechCabal.

This shows that the acquisition is very pivotal to Chari’s overarching roadmap of promoting financial inclusion in Morocco, a country that still has 70% of the population unbanked, underbanked, and has no financial record that can be used to access credit.

So these people would normally go to the merchants in their environment to seek quick loans, as they won’t be needing financial records to get a loan.  

This trend prompted Chari last year, after it closed its $5 million seed funding, to acquire, a Moroccan credit and bookkeeping platform that served about 40,000 merchants. 

Acquiring now provided Chari with the knowledge of how end consumers take and repay loans since the smallholder merchants use Karny to provide credit and track and keep records of the flow of the funds. 

According to Belkhayat, the acquisition of Axa Credit will offer Chari the credit license needed to start offering loans at a bigger scale to its customers. “so we can move from closed-loop loans to open-loop loans,” he said. 

Speaking on the deal, Meryem Chami, the general manager of Axa Morocco, said: “We are thrilled to announce a cross-selling partnership between Axa Insurance Morocco and Chari. This partnership will allow Axa Insurance to keep growing on the Moroccan market and play a central role in financial inclusion.” 

In January, TechCabal reported that Chari may be on its way to becoming the first Moroccan startup to clinch the unicorn status. As it is, that’s not far from the truth because while other Moroccan startups are exiting, Chari keeps acquiring and bumping up its market reach and valuation. To crown it up, the startup has hinted that it’s currently in the fundraising mood for a large Series A round.

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