NBFCs, digi lending platforms lead PE-VC funding in Q1 2021

Chennai: If edtech and e-commerce ruled PE-VC investments in the first wave of the pandemic, 2021 has brought an unlikely leader in the banking, financial services and insurance sector as both conventional NBFCs and tech-powered lending startups accounted for 54% of the total PE-VC funding raised in January to March. The BFSI sector has raised close to $6.4 billion in investments in the first three months of 2021 compared to just $697 million in the same quarter last year.Led by distress deals and investment spree of fintech players, private lenders (conventional NBFCs and fintech platforms) raised almost $6.1 billion funding in the first quarter of 2021. The $5.2 billion deal between Piramal Group and debt-ridden Dewan Housing and Hong Kong-based Ares SSG’s $380 million investment in Altico Capital led the pack making the sector an outlier in the quarter. Among growth capital deals, NBFC Five Star Business Finance raised $234 million from existing investors Sequoia Capital India and Norwest Venture Partners and new investors KKR and TVS Capital, turning a unicorn. Fintech player KreditBee raised $70 million in February and $75 million in January from marquee investors to close a Series C round of over $150 million- one of the largest for a lending startup. Interestingly, the startup also gave a full exit to its Chinese investors — Shunwei Capital and Xiaomi — with this. Gold loan platform Rupeek also continued its run with a Series E fundraise of $33 million led by GGV Capital. Arun Natarajan, founder, Venture Intelligence, said distress deals picked up by deep-pocketed global and local investors and growth capital raised by tech savvy NBFCs and fintech players led the pack in the first quarter on the back of expectation of an economic recovery.
“As B2B companies attract private investment, platforms lending to small businesses are also getting the investor attention and emerging front runners in this segment,” he added. Madhusudan E, co-founder and CEO of KreditBee believes personal finance should “graduate from a luxurious aspiration to a trivial commodity” available at a click. “A complex demography like India requires simple, effective and impactful lending solutions that comes with a deeper understanding of the consumer financing needs of the ecosystem,” he said while closing his recent round.
A recent Boston Consulting Group and FICCI report predicts that India is poised to clock a fintech sector valuation of $150-$160 billion by 2025 translating to an incremental value-creation potential of approx $100 billion. “To meet this ambition, India’s fintech sector will need investments of $20-25 billion over the next five years,” it added.