Crowdyvest Limited, a Nigerian crowdfunding platform, is at a crossroads as it grapples with a ₦7.7 billion debt owed to 3,700 crowdfunding investors. This financial conundrum has persisted since 2021, and the company has now unveiled a daring proposal to convert a significant portion of this debt into equity.
The company, which once thrived as a member of the EMFATO group alongside firms like Farmcrowdy, facilitated retail investors' contributions to agritech projects. However, the emergence of challenges, including the COVID-19 pandemic, led to difficulties in project repayments, creating a snowball effect on Crowdyvest's financial obligations.
Crowdyvest CEO Temitope Omotolani is taking proactive steps to address this issue. While assuring investors of their commitment to meeting obligations, the company is concurrently exploring opportunities for investors to receive quarterly payouts as they recover funds from project partners. Approximately ₦2 billion is anticipated to be recovered in the next two years and disbursed through a registered asset manager.
The transformative part of the plan involves converting ₦5.7 billion of the debt into equity in Crowdyvest Management Limited. This means that the investors who are owed will collectively own a 35% stake in the company. The debt-to-equity conversion strategy is reminiscent of Patricia, a crypto company that faced a similar challenge.
Crowdyvest is also unveiling a new investment vehicle called the "Phoenix Fund" to raise essential funds. The company's journey is emblematic of the resilience and adaptability required in today's financial landscape, as it navigates the intricate balance of financial recovery and innovation
Source: TechCabal
