Kunal Shah, a serial entrepreneur and founder of fintech firm Cred, has acquired a non-banking finance company through an entity he has floated personally, sources aware of the matter said.
Shah, through Newtap Technologies Pvt. Ltd., has acquired Parfait Finance & Investment, looking at a wider fintech play for Cred with lending. The Reserve Bank of India (RBI) has approved the acquisition, people briefed on the matter said.
Shah had previously cofounded Freecharge and sold it to Snapdeal for $400 million in 2015.
Cred, which is valued at around $4 billion, has also applied to the banking regulator for a payments aggregator licence, people familiar with the development said. This is in line with the company’s strategy of enabling e-commerce, one of the people said.
- A payments aggregator enables merchants to receive digital payments from multiple platforms without having to enter into individual tie-ups with service providers.
For now, RBI’s approval for the NBFC acquisition came in October, the people added.
Though not a direct acquisition, buying out a finance company signals that the fintech startup is keen to increase its footprint in the financial services space. Cred’s lending product had a loan book of Rs 2,000 crore in August with NPA ratio of less than 1%. It already offers loans to approved users but that is through a partnership with IDFC First Bank.
Fintech firms in India are increasingly looking to have their own NBFCs to lend on their own as that enables them to design better products and have wider margins. In August, Cred launched Cred Mint to enable users to on-lend to other Cred customers following a tie-up with LiquiLoans—an RBI registered P2P non-banking lender.
Since its launch as a credit card repayment player in 2018, Cred has forayed into e-commerce, lending, payments and now investment segments within its platform.
In August, Shah told ET that about 25-30% of all credit card bill payments in India were happening through Cred and that its commerce business now has over 2,000 brands.
“Cred (Dreamplug Technologies Pvt. Ltd.) has not applied to acquire an NBFC. Newtap Technologies Pvt. Ltd, in which Kunal Shah has invested in a personal capacity, has applied to the RBI for approval to acquire a stake in Parfait Finance & Investments Pvt. Ltd.,” the company told ET in an email.
At a time when credit card issuers are charging extremely high rates for rollover and for EMI facilities, there is an opportunity to provide cheaper, seamless credit to the premium segment, said an industry expert.
Surging Valuations
In October, Cred closed a $251 million funding round in what was its third fundraising round this year, taking its valuation to $4 billion. Existing investor Tiger Global and Falcon Edge co-led the Series E financing round, which also saw participation from Marshall Wace and Steadfast Venture Capital, DST Global, Insight Partners, and others.
Source: Economic Times