Lendingkart, a digital lending platform for micro, small and medium enterprises (MSMEs), has acquired personal loan provider Upwards in a cash-and-stock deal worth Rs 100 – Rs 120 crore.
The acquisition is in line with Lendingkart’s move to diversify its product portfolio as it looks to add newer offerings to its mix.
As part of the acquisition, Upwards’ investors Mayfield and India Quotient will get an equity stake in Lendingkart, while its other major investor Shunwei Capital will record a cash exit.
After the acquisition, Lendingkart will continue to retain the Upwards brand, and will absorb its entire 100-member team.
The acquisition will allow Lendingkart to focus on lending to micro-entrepreneurs as well as allow its MSME borrowers to extend personal loans to their blue-collar workforce, founder and chief executive Harshvardhan Lunia told ET.
“While catering to our MSME customers, we were figuring out what else we could do. We realised that there are a lot of businesses which are run by single-member teams who could take a personal loan. Even our MSMEs have a blue-collared workforce which don’t have access to credit or financial products. We look forward to solving these segments through the Upwards acquisition,” Lunia said in an interview.
According to Lunia, Upwards will also gain from the scale and size of Lendingkart and reach out to more customers.
Founded in 2017 by IIT-Delhi graduates Abhishek Soni and Nimesh Verma, Upwards provides personal loans and instant credit lines to users, with an average ticket size of Rs 1.5 lakh. It has marked 10 million downloads since inception and has an active loan book of Rs 200 crore.
It last raised Rs 32 crore in 2018 in a round led by Shunwei Capital, a Chinese venture fund.
At present, Upwards is clocking average disbursals of Rs 15 crore per month.
In the past, several fintechs have served the credit demand of blue-collar workers. These include Ola-owned Avail Finance along with the likes of Kosh, Bueno Finance among others.
However, the segment is tricky, due to higher serving and acquisition costs as well as the requirement for reduced interest rates.
“Interest rates of products for these (blue-collared) segments have to be rationalised. We believe that we have enough alternate data from serving MSMEs (working with this segment) over the years to provide better credit solutions now. Also, public infrastructure such as Account Aggregator and digital KYC (know-your-customer) has reduced costs and providing loans is getting more comfortable,” said Lunia.
Over the past year, Lendingkart has diversified into co-lending model partnerships with its banking and NBFC partners.
It is looking to exit FY23 with overall revenues of $100 million and an outstanding loan book of Rs 5,000 crore, Lunia told ET. It is also looking to record a profit by the end of the current fiscal year.
At present, Lendingkart’s direct exposure stands at roughly 20% of the overall loan disbursed every month. It disburses Rs 400 crore in loans from its platform each month, Lunia added.
Source: Economic Times