Private equity firm KKR is in talks to invest in fintech startup Razorpay and will likely buy out some of its existing early-stage investors in a secondary transaction.
The buyout fund is also likely to invest in the company’s primary funding round along with its other investors, four people with knowledge of the development said, requesting anonymity.
KKR Digital, set up to scout for opportunities in digital businesses, is going to lead the round, one of the four people said.
“The company is looking to raise a $125 million round at a valuation of around $7.8 billion (its last transaction value in December 2021),” the person added, requesting anonymity.
Of the $125 million, around $60-70 million will go towards buying out shares from some early-stage investors such as Y Combinator, the second person said.
“Existing investors are also likely to participate in the round that will help the company mop up funds to execute its inorganic growth plans,” he added.
Spokespeople for Razorpay and KKR did not respond to emailed queries.
In May, venture capital firm Lightspeed Venture Partners, along with Moore Strategic Ventures, invested $75 million in a secondary transaction. In December 2021, Razorpay said it raised $375 million in its Series F financing round co-led by Lone Pine Capital, Alkeon Capital and TCV. This round valued the company at a pre-money valuation of around $7.5 billion. The company has so far raised over $740 million from investors such as Tiger Global, Sequoia Capital India and GIC.
Founded in 2014 by Harshil Mathur and Shashank Kumar, Razorpay provides payment gateway services to businesses and e-commerce platforms.
The company also operates a neo-banking platform through which it offers credit cards and working capital to businesses. Last year, the company said it processed $60 billion in transactions. It competes with online payment gateways such as BillDesk, Cashfree and PayU.
“The new funding round is at a flat valuation, which itself is commendable given how the larger funding environment is,” the third person said.
Last month, Razorpay acquired payments-linked loyalty and engagement solutions provider PoshVine for an undisclosed amount, marking its fourth acquisition in 2022 and seventh overall.
In an interview, the company’s chief executive Harshil Mathur said it would continue to make small acquisitions. Earlier this year, it acquired Ezetap in a $200 million deal. KKR is trying to increase its bets on the high-growth digital businesses in India to diversify its investments. It recently picked up a small stake in eyewear retailer Lenskart.
The digital team within KKR is sourcing more deals across consumer, fintech and health tech, the fourth person with knowledge of the firm’s plans said.
“We are sufficiently capitalised and don’t have immediate plans of raising funds. We continue to be in talks with investors now and then. If and when something materialises, we’ll be happy to share,” a Razorpay spokesperson said in an emailed response.
