In 2017, Estonians Eerik Oja and Marten Orgna started a car rental company called Inclusion OÜ under the brand name Planet42.

The company started renting cars to people who could not get a loan from a bank in the Republic of South Africa, before expanding to Mexico in 2021.

During its seven years in business, the firm borrowed €115 million from hundreds of investors.

In late July, Inclusion OÜ reported difficulties and said it would stop making loan repayments, business daily Äripäev reported.

Owning a car has never been simpler

"Inclusion OÜ, operating under the brand name Planet42, democratizes mobility in developing countries by enabling people ignored by banks to access personal vehicles. The group offers long-term car rental services through its wholly-owned subsidiaries in Mexico and South Africa," the company described its activities in its 2023 annual report.

The company wrote that banks do not offer vehicle financing services to a large portion of the population due to potential financial risk, although access to a personal vehicle could be life-changing on an individual level.

"Planet42's long-term car rental service allows individuals ignored by banks to acquire vehicles. The company offers this service through used car dealerships in such a way that Planet42 never physically sees either the client or the car being purchased," the company explained.

An automated assessment algorithm instantly analyzes applications submitted to Planet42, providing an initial evaluation of the client's creditworthiness and generating a preliminary offer. If the preliminary offer's terms are acceptable to the client, their bank statements and identification documents are further verified. Upon validation, the client receives a final offer, selects a car and signs the contract, the company elaborated.

As the next step, Planet42 purchases the client-selected car from the dealership and then leases it to the client on a long-term basis. The rental payments include comprehensive and mechanical insurance as well as GPS service, the company noted.

As of March, the company had over 12,000 cars.

Loans worth €115 million

The company noted in its report that between its founding and the end of 2023, it had raised nearly €115 million in debt and equity.

In 2023, the company raised approximately €35 million through its entities in Estonia, South Africa and the United Kingdom. The previous year, it raised €43 million in debt and equity.

The company added that it continues to invest in business growth and expansion, and that in 2024, it has secured additional loan capital from existing lender Mintos Finance SIA and new lender Standard Bank of South Africa.

The company's revenue in 2023 was €32.9 million, but it incurred a loss of €20.3 million. According to the report, the company had total liabilities of nearly €97 million, with assets amounting to €86 million, leaving a shortfall of around €11 million.

The management acknowledged the negative equity at the end of 2023 and stated that they had raised additional equity investments in the new financial year to address this issue. The company also noted that it is in a growth phase and does not experience seasonal or cyclical fluctuations in its operations.

On average, the company employed 181 people, and two members of the management board received total compensation of €598,764 last year.

In its nearly seven-year operating history, the company has never made an annual profit.

How to get rich?

In 2023, the company raised €8.2 million in unsecured loans from Estonian investors and made repayments of €6.2 million. The previous year, the company borrowed €15.4 million from Estonian investors and repaid €5.6 million. In 2021, the company borrowed €15.1 million from Estonian investors and repaid €1.4 million.

In 2022, Planet42 joined the Latvian investment platform Mintos.

In June 2023, Äripäev highlighted that the company's cash flow was negative and without raising new funds, there could be issues with servicing the interest on previous bonds.

Estonian investor Jaak Roosaare, author of the "Rikkaks saamise õpik" ("Textbook on getting rich") series and a minority shareholder in the company, also helped assemble syndicates of Estonian investors for the company.

Loan repayments stop

At the end of July, investors received a letter from the company announcing difficulties and the suspension of loan repayments, reported Äripäev.

"Dear investor, I regret to inform you that unexpectedly deteriorating business conditions in South Africa have put Inclusion OÜ under financial pressure," wrote Eerik Oja, a member of the company's management board, in a letter to investors.

Oja noted that the company's management is aware of the business risk that has materialized, and therefore decided to temporarily suspend the scheduled interest and principal payments on subordinated loans due on July 31.

The management board member added that investors would be informed of further steps to restore the company's financial stability by August 15.

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