Fullerton Financial Holdings (FFH), which is owned by Singapore state investment firm Temasek, is increasing its stake in micro, small and medium enterprise (MSME) lender Lendingkart to take control of the company.
Lendingkart said Fullerton will invest Rs 252 crore (about $30 million), after receiving regulatory approvals, and will become majority shareholder. It did not disclose the additional stake it will acquire.
The firm owned a 38.16% stake in Lendingkart as of March 2024, VCCircle has gathered. Even if Fullerton is increasing its stake to 50%, the deal will value Lendingkart at about Rs 2,100 crore ($250 million).
Lendingkart said in the statement the capital will allow the company to deepen its reach in underserved markets and enhance its technology.
“This investment represents a vote of confidence in Lendingkart's ability to transform the MSME lending landscape,” said Harshvardhan Lunia, founder and managing director of Lendingkart. “Our goal is to replicate FFH’s past successes in the Indian financial market. With FFH’s backing, we aim to bring more small businesses into the formal lending ecosystem.”
Lendingkart Group has raised more than Rs 1,100 crore to date from a slew of investors, including Saama Capital, Mayfield India, India Quotient, Bertelsmann India Investments, Darrin Capital Management and Sistema Asia Fund. Fullerton alone has invested Rs 722 crore in the company since 2019.
Lendingkart last raised Rs 319 crore ($42 million at current exchange rates) in its Series D funding round in 2020, from investors including Fullerton Financial, Bertelsmann India Investments, Sistema Asia Fund and India Quotient.
Lendingkart was founded by Lunia in 2014. The company provides capital access to MSMEs, and competes with Aye Finance, Clix Capital, NeoGrowth, and FlexiLoans, among others. Its parent firm also operates fintech platforms—2gthr, Cred8, Xlr8 and Collec10—that improve the lending capabilities of banks and other lenders.
It provides unsecured loans for working capital needs to small and medium enterprises (SMEs) with loan terms ranging from 6-36 months and an average loan size of Rs 6-7 lakh.
The latest deal comes as the non-banking lender saw its net profit reduce to half in the financial year-ended 2024 to Rs 60 crore ($7.2 million) due to a weak quarter and a slightly higher cost of borrowing. It previously reported Rs 115.7 crore ($13.9 million) of net profit in FY23.
The company is going through a cash crunch, according to a report by The Economic Times.
Even as the company's assets under management grew by 46% to Rs 7,254 crore in the last financial year, its asset quality has worsened. Its gross non-performing asset ratio worsened to 2.9% at the end of FY24 from 2.6% previously, while net non-performing assets stood at 1.9% compared to 1.4%.
