NetAmbit InfoSource & e-Services Pvt Ltd, a financial products distribution company, has raised Rs 55 crore in a mix of equity and debt in Series C or the third round of institutional capital funding for the company. Existing investors Helion Venture Partners and Bessemer Venture Partners will put in Rs 40 crore of equity capital while Silicon Valley Bank subsidiary, SVB India Finance, will lend Rs 15 crore as venture debt, a top company official told VCCircle.
It was only last year that the company raised Rs 55 crore in second round of funding, led by Helion Venture Partners. In 2007, the financial distribution company had raised Rs 10 crore in its first round of funding from Bessemer Venture Partners.
This takes the total amount of equity capital raised by the company to about Rs 105 crore in the span of four years between two private equity investors. The entire rationale behind raising the venture debt in the latest round of funding was to maintain a healthy debt-equity ratio.
“We wanted to maintain a healthy debt-equity ratio. We have a minimal amount of debt on the company’s balance sheet as of now. Also, we are a services company and it is difficult to raise debt from banks otherwise. So we went for venture debt, which can participate along with private equity investors,” Girish Batra, chairman and managing director of NetAmbit, told VCCircle.
The VC-backed financial distribution company will use the money to fund its aggressive expansion plans on radar. “Right now, we are the largest financial products distribution company. We now want to become India’s financial retail super market,” said Batra.
NetAmbit is essentially about leveraging the strong distribution sale operations that the Noida-based company has built for itself in the last 10 years. It follows a brand agnostic model, which means selling financial products of any company. Recently, Anil Ambani Group firm Reliance Life Insurance has tied up with NetAmbit. With this tie-up, all products of Reliance Life Insurance can now be purchased through the offices and outlets of NetAmbit, spread across 140 locations across the country. What’s more, the Life Insurance Corporation of India (LIC), also in a tie-up with NetAmbit, is looking at over four-fold jump in new business income to Rs 5,000 crore in the current fiscal through this distribution tie-up, it has said.
With more than 4,000 employees on board, NetAmbit bills itself as the largest ‘non-affinity based direct sales model’ for distributing financial products in India. Affinity marketing means marketing products to new consumers on the basis of their past buying patterns or interests – for instance, offering international roaming plans to members of airlines’ frequent flyer programmes. In NetAmbit’s case, the opposite or non-affinity simply means selling to people whose needs and preferences are not known to you. For the year ended March, 2010, NetAmbit sold insurance policies worth Rs 450 crore, of which new policies accounted for Rs 200 crore. The company has also pioneered the direct marketing model, which is now generically referred to as the ‘NetAmbit Model’ in the industry.
According to Batra, NetAmbit is looking at revenues of Rs 100-Rs 160 crore by the end of this fiscal year. As of now, it is already recording revenues in the range of Rs 100 crore. The company is also looking at a headcount of about 10,000 employees and 400 locations by 2013, up from its current strength of 4,000 employees and 150 locations. “The idea is to go deeper into tier II-tier III cities, which is where the growth lies.” About 60-70 per cent of the company’s business comes from these areas, Batra added.
The company is also open to acquisitions. It is actively looking at companies which have strong offline asset distribution networks in tier II and tier III cities. Recently, the company also acquired Rupee-Talk.com, a personal finance portal, to establish a presence in the expanding Internet space.
For the ‘hub and spoke’ financial products distributor, a public market listing is also on the cards. The company, which has consistently raised VC fundings, is confident of an IPO by 2013-14. “We plan to go for a public markets listing by 2013-14 when we become a Rs 600 crore company," Batra adds.
According to VCCedge, the financial research platform of VCCircle, private equity investments in the banking and financial services sector have been on the rise with nearly 44 deals worth $1.4 billion in the sector during 2010. Last month, global venture capital firm Walden International invested $6 million in BankBazaar.com, an online distributor of consumer loans and insurance products.