MSME lender Lendingkart’s existing investor Fullerton Financial Holdings (FFH) has acquired a controlling stake in the company for Rs 252 crore, the company announced on Friday. FFH, which is a wholly-owned independent portfolio company of Singapore-headquartered investment company Temasek, will become a majority controlling shareholder in Lendingkart following the regulatory approval of the deal. Fullerton had a 38.16 per cent stake in the company as of March 2024.
Speaking on the acquisition, Hong Ping Yeo, CEO of FFH, said, “Our investments in Lendingkart are a testament to our continued belief in the MSME opportunity in India and that well governed, scalable franchises can bring significant value to small businesses.”
Founded in 2014 by Harshvardhan Lunia, Lendingkart has so far raised around Rs 1,050 crore in equity from FFH, Bertelsmann, Mayfield India, Saama Capital, Sistema Asia, India Quotient, and others.
“This investment represents a vote of confidence in Lendingkart’s ability to transform the MSME lending landscape. Our goal is to replicate FFH’s past successes in the Indian financial market,” said Harshvardhan Lunia, Founder & Managing Director, Lendingkart.
Importantly ratings agency ICRA in July this year had revised its outlook on long-term ratings of Lendingkart Finance, the NBFC arm of Lendingkart Technologies, to stable from positive due to “weakening in asset quality, driving weak profitability of the Lendingkart Group.” The outlook had also factored in fundraising by Lendingkart Finance in the near term and support from its largest shareholder, FFH.
“The company witnessed asset quality pressure in FY2024 primarily due to the challenges related to collections, leading to elevated credit costs,” ICRA said. Moreover, on a consolidated basis, the group’s managed gearing increased to 9.3 times as on March 31, 2024 from 6.3 times as on March 31, 2023, due to significant growth in the co-lending portfolio, weak internal accruals and the absence of a capital raise in FY2024 to support the growth, the agency had said.
On a consolidated basis, Lendingkart Technologies’ (the holding company) total income had increased in FY24 to Rs 1,218 crore from Rs 858 crore in FY23, and its profit after tax had dropped significantly to just Rs 3 crore in FY24 from Rs 119 crore in FY23, according to the ICRA report.
Standalone, Lendingkart Finance reported a net profit decline to Rs 60 crore in FY24 from Rs 116 crore in FY23.
Since its inception, Lendingkart Group has disbursed over 3 lakh loans worth over 20,000 crore.