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Economic Times
9 hours ago
- Business
- Economic Times
Digital lending startups put off IPO plans amid muted growth
Several digital lending startups reported a slowdown in growth in financial year 2025 amid rising credit and operating expenses and tighter regulatory norms. According to people in the know, the muted performance might affect some of their plans to go public in this year. While Moneyview and Kissht are in the process of filing their draft documents with the market regulator, Kreditbee is seeking a board approval to convert itself into a public limited company, taking one step closer to its IPO. "Many of these fintechs are just looking to keep their regulatory clearances in place, but will eventually want to time their public listing when their financials are in a better place and overall market sentiments have changed," said a founder of a digital lending startup. Lending platforms such as Axio, Fibe, Moneyview and Kreditbee showed divergent performance in FY25. 'Lending companies saw higher operating expenses as credit quality worsened, and regulatory tightening forced businesses to slow disbursals and grow more cautiously,' chief executive officer of a digital lending startup said on condition of Kreditbee reported a comparatively muted net profit growth of just over 10% in FY25 at Rs 221 crore, up from Rs 200 crore in FY24, while its operating revenue jumped 56% to Rs 2,185 crore from Rs 1,399 crore.A sharp 67% year-on-year increase in expenses to Rs 1,890 crore in FY25 dented the bottom-line growth of Kreditbee, which primarily offers unsecured consumer Moneyview reported an improvement in the returns on its assets under management (AUM) while it slowed down disbursement growth in the last fiscal.'Since the second half of FY25, the company has consciously reduced disbursements and plans modest AUM growth in FY26,' India Ratings and Research said in a ratings document issued on April Bengaluru-based startup's return on average assets deployed went up to 6.8% in the first nine months of the last fiscal, compared to 6.65% in details of financial performance of the company are not available. Fibe, which raised $90 million through a mix of primary and secondary funding in June 2024, performed better than its rivals. The Pune-based startup, which offers personal loans and instant cash loans, nearly doubled its net profit to Rs 100 crore in FY2025, up from Rs 55 crore in FY24, taking more out of its operating income of Rs 1,033 crore in FY25 against Rs 708 crore in the preceding lending platform Axio (formerly Capital Float), reported a pre-provisioning profit of Rs 24 crore in the first half of the fiscal year 2025, down from Rs 81 crore in FY24. Axio is in the process of getting acquired by ecommerce major Amazon. The deal is awaiting clearance from the Reserve Bank of India. According to a rating document issued by Crisil Ratings in January, credit costs of Axio surged to 7% in the first half of FY25 from 4% in promoters are hopeful that despite the challenges, the sector should do better in coming months as there is stability. IPO still some time away An Indian partner at a large US-based venture fund with multiple fintech investments said that while several digital lenders are preparing for IPOs, most are likely to wait until the December quarter before filing their final prospectus for a public listing.'For some, the IPO is a route to provide exits for existing investors. For others, it's more about testing market appetite,' he said, adding that these companies aim to complete the fundraising process while they still have venture capital in the chief executive quoted earlier said the first set of draft red herring prospectus (DRHP) filings for IPOs by digital lending startups will likely happen by the end of July. Sebi approvals could take another three months, followed by a two- to three-month window before the companies are ready to go public.'Overall, it's a nine-month process. So, timing the market becomes key for any fintech looking to list,' the CEO said. Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Punit Goenka reloads Zee with Bullet and OTT focus. Can he beat mighty rivals? 3 critical hurdles in India's quest for rare earth independence HDB Financial may be cheaper than Bajaj Fin, but what about returns? INR1,300 crore loans for INR100? Stamp duty notice to ArcelorMittal, banks. Stock Radar: Titan Company breaks out from 3-month consolidation; check target & stop loss for long positions For risk-takers: More than bullish, be selective; 5 mid-cap stocks from different sectors with an upside potential of up to 38% Multibagger or IBC - Part 12: If transition is successful then there is no limit. But there is a big 'IF' These mid-cap stocks with 'Strong Buy' & 'Buy' recos can rally over 25%, according to analysts
Time of India
11 hours ago
- Business
- Time of India
Digital lending startups put off IPO plans amid muted growth
Academy Empower your mind, elevate your skills ETtech Several digital lending startups reported a slowdown in growth in financial year 2025 amid rising credit and operating expenses and tighter regulatory norms. According to people in the know, the muted performance might affect some of their plans to go public in this Moneyview and Kissht are in the process of filing their draft documents with the market regulator, Kreditbee is seeking a board approval to convert itself into a public limited company, taking one step closer to its IPO "Many of these fintechs are just looking to keep their regulatory clearances in place, but will eventually want to time their public listing when their financials are in a better place and overall market sentiments have changed," said a founder of a digital lending platforms such as Axio Fibe , Moneyview and Kreditbee showed divergent performance in FY25.'Lending companies saw higher operating expenses as credit quality worsened, and regulatory tightening forced businesses to slow disbursals and grow more cautiously,' chief executive officer of a digital lending startup said on condition of Kreditbee reported a comparatively muted net profit growth of just over 10% in FY25 at Rs 221 crore, up from Rs 200 crore in FY24, while its operating revenue jumped 56% to Rs 2,185 crore from Rs 1,399 crore.A sharp 67% year-on-year increase in expenses to Rs 1,890 crore in FY25 dented the bottom-line growth of Kreditbee, which primarily offers unsecured consumer Moneyview reported an improvement in the returns on its assets under management (AUM) while it slowed down disbursement growth in the last fiscal.'Since the second half of FY25, the company has consciously reduced disbursements and plans modest AUM growth in FY26,' India Ratings and Research said in a ratings document issued on April Bengaluru-based startup's return on average assets deployed went up to 6.8% in the first nine months of the last fiscal, compared to 6.65% in details of financial performance of the company are not which raised $90 million through a mix of primary and secondary funding in June 2024, performed better than its Pune-based startup, which offers personal loans and instant cash loans, nearly doubled its net profit to Rs 100 crore in FY2025, up from Rs 55 crore in FY24, taking more out of its operating income of Rs 1,033 crore in FY25 against Rs 708 crore in the preceding lending platform Axio (formerly Capital Float), reported a pre-provisioning profit of Rs 24 crore in the first half of the fiscal year 2025, down from Rs 81 crore in is in the process of getting acquired by ecommerce major Amazon . The deal is awaiting clearance from the Reserve Bank of to a rating document issued by Crisil Ratings in January, credit costs of Axio surged to 7% in the first half of FY25 from 4% in promoters are hopeful that despite the challenges, the sector should do better in coming months as there is Indian partner at a large US-based venture fund with multiple fintech investments said that while several digital lenders are preparing for IPOs, most are likely to wait until the December quarter before filing their final prospectus for a public listing.'For some, the IPO is a route to provide exits for existing investors. For others, it's more about testing market appetite,' he said, adding that these companies aim to complete the fundraising process while they still have venture capital in the chief executive quoted earlier said the first set of draft red herring prospectus (DRHP) filings for IPOs by digital lending startups will likely happen by the end of July. Sebi approvals could take another three months, followed by a two- to three-month window before the companies are ready to go public.'Overall, it's a nine-month process. So, timing the market becomes key for any fintech looking to list,' the CEO said.
Time of India
19-06-2025
- Business
- Time of India
As fintech lenders chase secured credit options, VCs up their bets
As unsecured lending slows, investor interest is shifting to secured lending platforms, attracting significant venture capital. Startups are expanding into secured loans like LAP and vehicle financing, but face challenges like high operational costs and default risks. Fintechs aim to offset this with technology-driven efficiency and selective physical branch expansion. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The slowdown in the unsecured consumer credit market is resulting in an increase in investor interest in secured lending platforms, a sector dominated by traditional financiers till the past one year, venture funds which typically fund tech-first companies have been betting on home financing startups , branch-led secured lenders offering products such as loans against property (LAP), loans against securities like mutual funds, vehicle lending companies and asset-based lenders. Easy Home Finance , Basic Home Loan and Vridhi Home Finance received significant equity infusions from venture funds such as Elevation Capital, Bertelsmann India Investments, Norwest Venture Partners and Ranjan Pai's Claypond Capital. Together these startups, founded between 2017 and 2022, have raised around $150 million in equity capital from these recently, Techfino raised around $7.5 million (Rs 65 crore) from Stellaris Venture Partners and others. Mahaveer Finance, which has been lending for used vehicles since the early 1990s, raised $23 million (Rs 200 crore) from Elevation Capital and others with an aim to add LAP and other similar products to its portfolio.'When we look at NBFCs (non-banking financial companies), we typically index on highly experienced promoters or founders, great track record on execution, prudent approach to risk management and underwriting, and a technology driven mindset,' said Mridul Arora, partner, Elevation Capital. 'Valuation multiples, however, are more a function of market cycle and risk-reward for that particular investment versus being determined by whether it is family owned or not.'With the winds blowing towards secured products, even well-funded unsecured consumer lending startups are jumping onto the such as Kissht, Loantap, Fibe and Kreditbee, all unsecured consumer lending players, have now built secured products including LAP, mutual funds and vehicle loans. Among the large fintechs, Cred, BharatPe and Paytm have also announced their entry into secured credit products over the past one of these players like Kreditbee are also looking to build branch networks, hoping to underwrite the underlying assets better.'We have run down our consumer lending book by 50%. Now the focus is to build small business loans for retailers,' said Satyam Kumar, CEO of Pune-based startup recently closed $6.2 million in equity funding from July Ventures and a strong understanding of certain customer cohorts, these startups feel that they can scale up secured products quickly catering to consumers who might be too risky for an unsecured personal secured lending is a major opportunity to compete with banks and larger NBFCs, fintechs will need to invest heavily in branch could push up costs and make the small ticket size lending business unviable.'Investments in physical assets and branches would eat into the delta that fintechs can make between the cost of borrowing and the rates they can offer to their customers,' said Rohit Chokhani, founder, Easy Home Finance. 'This business will be sustainable only when there is major scale.'Add to that the need to build collection teams, another major cost item, given that these loans would require agents to take possession of machinery or property in the wake of a released in January by TransUnion Cibil on the credit market in India showed that as of September 2024, 1.7% of the loans under LAP were due for at least 90 days, among the highest in all categories of consumer compete with the traditional bigwigs, these startups are trying to disrupt two major business areas – one, to reduce the operational cost through technology and, second, to ensure that the online application forms can weed out unwanted customers without human intervention.'Traditionally, 70 to 80% of a housing finance company's costs go into running physical branches. We're bringing that down to 40 to 50% by leveraging technology, which enables lower customer acquisition costs and better interest rates,' said Atul Monga, chief executive officer, Basic Home LoanCurrently, customers can be charged 25-27% for micro LAP products, way more than 15-20% for a personal loan. Startups are trying to find out whether technology can help reduce these costs.'We have built our in-house loan origination and loan management systems, which helps make the entire application process digital. We will still invest in expanding our branch network over the years, but back-end processes need to be technology-led,' said Ratikanta Satpathy, cofounder, Techfino.
