SoftBank-backed ANI Technologies Pvt Ltd, which operates cab ride-hailing aggregator platform Ola Cabs, has agreed to buy neobanking platform Avail Finance that provides financial services to the blue collared workforce, the company said in a statement on Thursday.
Ola did not reveal the amount of the acquisition and said that the deal is subject to shareholder approval. However, news portal Moneycontrol reported that the deal is a share-swap transaction, worth $50 million.
Incidentally, Ola is already an investor in Avail Finance, which was founded in 2017 by Ankush Aggarwal, Bhavish Aggarwal’s brother, along with Tushar Mehndiratta. Bhavish Aggarwal is the founder of Ola’s parent ANI Technologies Pvt Ltd.
Besides Ola, the financial services firm counts Falcon Edge and Matrix Partners as its investors. Recently, Avail Finance had acquired YeLo, a neobank operating in the same segment, and is also seeking the regulator’s nod to purchase non-bank lender Art Climate Finance (India) Pvt. Ltd, Mint had reported in November.
The startup, as per the report, is circumventing a key Reserve Bank of India (RBI) rule that allows only banks and non-banking finance companies (NBFCs) to lend. The regulation is not stringent for smaller NBFCs and they can get away with several audit and reporting requirements that the bigger companies are required to follow.
Avail Finance, operated by Avali Financial Services Ltd, claims to have over 6 million users. The acquisition will enhance Ola’s push into the fintech space, the company said as it looks to build a mobility focused financial services business under Ola Financial Services. With this acquisition Ola Financial Services will further strengthen its play in the ‘credit underserved segments’ that comprises blue collar workers such as Ola’s driver partner ecosystem, Ola said.
Ola will leverage Avail Finance’s products and capabilities, which will enhance Ola’s lending business and help Ola expand into neobanking products. Ola’s fintech business will be augmented by Avail Finance’s leadership team with experience in the consumer lending industry, along with a strong technical team across tech, product and design, data science and analytics amongst others, Ola said.
With this expansion Ola will be able to cross sell multiple lending products to its large driver partner base by providing them a one-stop destination for all their financial needs, Ola said.
Further, Ola said it had recently invested nearly Rs 800 crore into its financial services business and claimed that the business was showing strong growth across its lending and insurance verticals. Ola Postpaid, its BNPL (buy-now-pay-later) offering is available to 40 million customers, Ola said.
Ola, which also manufactures electric scooters under Ola Electric Mobility Pvt Ltd, also said its vehicle financing business is growing rapidly in conjunction with Ola Electric and Ola Cars, its used-car business. Ola said it has built a first-of-its-kind embedded motor insurance journey for Ola Electric and Ola Cars, where customers can select insurance and add-ons like roadside assistance or zero depreciation within the buying journey.
Recently, Ola had raised Rs 150 crore as a part of its Series J round from Axis Growth Avenues AIF and Arrow Multi-Asset Fund at a valuation of over $7 billion. However, the company, which had plans to go public in 2022, seems to have pushed back its IPO (initial public offering) plans amid global volatility. Reportedly, the company was also mulling a private market fundraise at a lower valuation of around $5 billion.
Ola’s strengthening of financial services business and forays into neobanking comes at a time when many technology startups across sectors in India are looking to add lending and credit to their product range. Ant Group-backed Zomato had recently said that it will set up a wholly-owned non-banking finance company (NBFC). While Zomato did not disclose the purpose behind it, reportedly, the food aggregator and delivery platform is looking to offer BNPL services to its customers through the NBFC.
Early this year, VCCircle had reported how India’s new-age financial technology services companies are increasingly launching neobanking platforms to offer credit and other banking solutions to customers in a bid to expand market share.
Many technology companies, including Ola, are also diversifying their offerings in a bid to provide users with an integrated one-stop application for routine needs. Ola, in January, had rebranded its quick commerce business as Ola Dash and had said that it plans to set up 500 so-called dark stores, or warehouses that do not have retail storefronts, in the next six months across 20 Indian cities amid rising competition for quick commerce in the country.
