Digital lender KreditBee has raised $280 million in a Series E round, marking one of the largest startup funding rounds so far this year, that too, at a unicorn valuation of $1.5 billion. The round has drawn participation from a mix of global and domestic investors, and has been nearly three times oversubscribed compared to what the company initially planned to raise, says Co-founder and CEO Madhusudan E. In an interview with Ayanti Bera, he discusses the rationale behind the fundraise, readiness for the upcoming IPO, and how the company plans to scale up its AUM while maintaining asset quality. Excerpts:
What drove the need for such a large cheque, and how will you deploy this capital?
As an NBFC, our growth is directly linked to our equity base because of the debt-to-equity leverage model. For every Rs 1 of equity, we can raise Rs 3 of debt and build a loan AUM (asset under management) of Rs 4. So the primary reason for raising capital is to scale up our AUM.
How was investor appetite for the round, especially in a cautious funding environment?
We went to market around October-November for the fundraise and saw very strong demand. The round was nearly three times oversubscribed compared to what we had initially planned to raise. We had participation from both new investors like Hornbill, Dragon, White Oak, and AP Moller, as well as existing backers such as Motilal Oswal, Advent, and Premji Invest.
How are the IPO preparations coming along, and what milestones are you working towards?
We are currently in the process of merging our NBFC and tech entities, which should be completed in the next couple of months. Post that, we are IPO-ready from a structural standpoint. The actual timing will depend on market conditions and board guidance, but we are looking at a potential listing window at the end of this year or early next year.
Your AUM currently stands at around Rs 15,000 crore. What are your growth targets?‘
The opportunity in India is massive, but growth must be balanced with risk management. Our aim is to double AUM over the next 2-3 years, taking it to around Rs 30,000 crore. The capital we’ve raised should support this expansion.
How has KreditBee maintained asset quality despite macro shocks and regulatory tightening?
Risk management has been our core discipline from day one. Whether it was Covid period or the recent microfinance stress, we’ve stayed resilient. Also, our focus has always been on mid-India, that is, tier 2 to tier 4 markets, which now account for over 80% of our customers. These markets are underpenetrated but require strong underwriting capabilities.
Beyond personal loans, how are you diversifying your portfolio?
We’ve expanded into SME lending and loans against property (LAP) over the past 18 months. SME lending now contributes around Rs 1,000-crore AUM, while LAP is about `500 crore. A key strategy here is cross-selling to our existing customer base of over 5 million active borrowers.
How was your financial performance in FY25?
Our consolidated revenue grew from around Rs 1,800 crore in FY24 to Rs 2,700 crore in FY25, with PAT increasing from about Rs 288 crore to about Rs 470 crore.
What does your loan book composition look like today?
Over 70% of our AUM is on our own books, with the remaining 30% through co-lending partnerships. We expect this mix to broadly continue, with a strong focus on our own NBFC-led lending.
How is AI reshaping your business?
AI is a game changer across three areas: operational efficiency, productivity, and user experience. We’ve already automated a significant portion of customer interactions, but the most exciting opportunity is in user experience, where AI can guide customers in real time during the loan journey, reducing drop-offs and improving conversion.
How do you see AI influencing lending behaviour in the future?
We are moving from a “search-based” internet to a “prompt-based” one. In the future, users may not explicitly search for loans. AI systems could anticipate needs based on behaviour and context. This shift will be especially pronounced among Gen Z users, who are more likely to rely on AI-driven decision-making.