Talks are presently underway with both foreign and domestic investors for Flexiloans, a digital lending platform that specializes in financing small businesses, to raise about Rs 300 crore ($35 million) in a new equity round. Potential investors could include Fundamentum, an investment business co-founded by Infosys cofounder Nandan Nilekani, and Accion, a US-based nonprofit organization committed to financial inclusion, according to sources familiar with the negotiations. The anticipated outcome of this funding round is a substantial increase in Flexiloans’ valuation, which might reach approximately Rs 1,200 crore ($140 million), from its prior estimate of Rs 700 crore.
Deepak Jain, Ritesh Jain, Manish Lunia, and Abhishek Kothari—all graduates of the Indian School of Business—founded Flexiloans in 2016 with the goal of lending money to small companies using online platforms. The Mumbai-based business faces competition from other online lenders like Lendingkart and Indifi. Among the noteworthy supporters of Flexiloans is Sanjay Nayar, the former Indian captain of KKR for almost ten years. One of the co-founders, Abhishek Kothari, went on to lead fintech company Pepper Money India as CEO.
It is anticipated that Flexiloans will use the new money it acquired in this investment round mostly to expand its lending operations and finance the purchase of more debt. This comes after the business raised $30 million in stock from investors including Denmark-based MAJ Invest in 2022. The funds have arrived at a crucial juncture for the digital lending industry, which has faced multiple obstacles in the wake of the Covid-19 outbreak.
There has been a range of activity in the broader digital lending sector; last year, Indifi secured $35 million in equity, while Lendingkart is allegedly considering a fresh equity round valued at $30 million to $50 million. Lenders who specialize in small businesses, such as Flexiloans, are becoming more and more popular despite the general slump in the unsecured consumer lending market. Tech-enabled businesses that can sustain high asset quality are of special interest to investors, which makes them attractive targets in a competitive funding climate.
The collaboration between Flexiloans and the non-banking finance company Epimoney has helped to further promote the company’s growth. For the first nine months of the previous fiscal year, Epimoney posted a net profit of Rs 14 crore, per a recent study by India Ratings & Research. After suffering a loss of Rs 10 crore in FY22, the company reported a net profit of Rs 6.7 crore in FY23, which is a remarkable increase. The study also mentioned that Flexiloans has about Rs 2,000 crore in assets under control.
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