India and China accounted for the highest fintech adoption rate in the world’s emerging markets, as per a joint report published by EY and IVCA earlier this year.
The fintech space is buzzing with activity. In January, the sector got its first unicorn of the year, helped by Digit Insurance’s Rs 135-crore fundraising from a clutch of investors at a valuation of $1.9 billion. While funding deals in the segment continue to gain pace, some players are also well headed for an IPO (initial public offering), riding on the whetted appetite for fintech services.
India and China accounted for the highest fintech adoption rate in the world’s emerging markets, as per a joint report published by EY and IVCA earlier this year. India stood at an 87% adoption rate compared to the global average of 64% as of March 2020.
Categories such as digital payments and insurtech have actually seen a boost, driven by customers’ increasing digital adoption amid Covid, analysts said. In fact, local fintech firms attracted some $2 billion in funding in the January-June period alone, almost nearing the total investments the space garnered in the whole of 2020, analysts at KPMG said in a recent study.
Investors had infused about $2.25 billion into sectoral companies last year. POS player Pine Labs bagged the biggest slice of funding, closing a $600-million funding round recently, backed by Baron Capital Group, Moore Strategic Ventures, Fidelity Management and Research Company and BlackRock, among others.
Kunal Shah led-Cred and BharatPe joined the ranks of the unicorn with significant investor backing. While Cred garnered $215 million in funding at a valuation of $2.2 billion, BharatPe raised a fresh $370 million led by Tiger Global, at a valuation of $2.85 billion.
PineLabs and Cred deals are among the top 10 fintech transactions made in the Asia-Pacific region in the first half of the year, revealed the KPMG report. Besides, the insurtech segment is also a growing area of interest for investors in India, they said.
Several insurtechs raised mid-sized VC or PE funding rounds, including Turtlemint, RenewBuy and Digit Insurance.
“Early fintech leaders in India have continued to expand their business models into adjacencies in order to bring their customers more value,” analysts said. For instance, analysts at Bernstein estimate Paytm’s revenue base to double to nearly $1billion by FY23 with non-payments revenue contributing about 33%, led by credit tech. Paytm is looking to raise up to Rs 16,600 crore through IPO, which is set to be the biggest since the Rs 15,200-crore public issue floated by Coal India in 2010. PB Fintech, the parent company of online insurance aggregator Policybazaar and Paisabazaar, is aiming to raise up to Rs 6,017.5 crore through IPO, while Mobikwik is another fintech player that is gearing up to go public.