Soros, Cohen Boost Stakes in Argentine Mobile Banking Venture

  • Ualá offers low-cost banking alternative via smartphones
  • Company expects 100,000 Ualá users by end of this year

George Soros

Photographer: Jason Alden/Bloomberg

George Soros and Steve Cohen are expanding their stake in an Argentine tech start-up that aims to transform how people in South America’s second-largest economy save and spend.

Ualá, which launched its mobile banking app in October with backing from the billionaire investors, raised $10 million in a funding round of Series A stock led by Soros that closed last week, according to Soros Fund Management. Cohen’s Point72 Ventures and Jefferies Group LLC also participated.

In a country where less than half the population has a bank account, Ualá offers tech-savvy Argentines a low-cost banking alternative via their smartphones. Demand for the product -- which provides a prepaid Mastercard without any opening, closing, maintenance or renewal fees -- exceeded the company’s expectations.

Some 50,000 cards were issued in Ualá’s first three months. At launch, founder Pierpaolo Barbieri said he expected 10,000 users by the end of 2017. Now he’s anticipating 100,000 a year later.

Frustrations With Banks

“People ask me who our ideal customer is, and we want everybody who’s frustrated with the banking system and wants to help us create a product that’s better and more accessible,” Barbieri, 30, said. “For a long time, banking in Argentina has been a tax on the poor, and that’s what we want to change.”

Read more about Ualá here.

Argentina’s economy is recovering from years of isolation from global markets, capital controls, protectionist policies and soaring inflation. Since President Mauricio Macri took office in December 2015, Argentina has attracted more than $100 billion in investment pledges, according to the Argentina Investment and Trade Promotion Agency. Almost $3 billion has been pledged from financial companies, led by Banco Santander SA, which said in November it would invest $550 million in digital technology for its Argentine unit.

In Argentina, 40 percent of the population already has smartphones -- and that’s set to grow to 70 percent by 2020, according to the trade group GSM Association. Ualá’s app, in which users sign up for an account, was the fifth-most downloaded among financial apps in Argentina as of Feb. 4, according to researcher App Annie.

Ualá Expansion

“We are excited to continue to work with Ualá and support its goals of making savings, payments and credit accessible to the unbanked and underbanked in Argentina and the broader Latin American region,” said Ilan Stern, a money manager at Soros Fund Management, which oversees the philanthropist’s wealth.

This year, Ualá plans on expanding into credit, including personal loans and allowing users to pay in installments, Barbieri said. The next step will be to take the company into other countries in the region.

"We often take for granted the breadth of digital financial services available in the U.S. and Europe,” said Pete Casella, head of fintech investments at Point72 Ventures. “The team at Ualá has bundled the services most relevant for the Argentinian population, and the early adoption reinforces their vision of a modern digital financial offering.”

    Before it's here, it's on the Bloomberg Terminal.