NBFC: the company promoted by the founder of Cred acquires a non-banking company

Kunal Shah, a serial entrepreneur and founder of fintech firm Cred, acquired a non-bank finance company (NBFC) through an entity he personally launched, sources familiar with the case.

Shah, through Newtap Technologies Pvt Ltd, acquired Perfect Finance & Investment, considering a larger fintech game for Cred with loans.

The Reserve Bank of India (RBI) has approved the acquisition, people briefed on the matter said.

Shah previously co-founded mobile charging company Freecharge and sold it to Snapdeal for $ 400 million in 2015.

Cred, which is valued at around $ 4 billion, has also applied to the banking regulator for an account aggregator license, people familiar with the development said.

RBI’s approval for the acquisition of NBFC came in October, the sources added.

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While not a direct acquisition, the takeover of a financial company indicates that the fintech startup is keen to expand its footprint in the financial services arena.

The application for an account aggregator license is also tied to its strategy of granting credit to customers, one of the people said.

Cred’s current loan product had a loan portfolio of Rs 2,000 crore in August with less than 1% of non-performing assets.

It already offers loans to approved users, but this is thanks to a partnership with IDFC First Bank.

Indian fintech companies are increasingly looking to have their own NBFCs to lend, as this allows them to design better products and have wider margins.

In August, he launched Cred Mint to allow users to lend to other Cred customers following a reconciliation with LiquiLoans – an RBI registered P2P non-bank.

Since its launch as a credit card reimbursement player in 2018, Cred has entered the e-commerce, lending, payments and now investment segments within its platform.

In August, Shah told ET that about 25-30% of all credit card bill payments in India are made through Cred, and his business now has more than 2,000 brands.

“Cred (Dreamplug Technologies Pvt Ltd) has not requested the acquisition of an NBFC. Newtap Technologies Pvt Ltd, in which Kunal Shah has invested in a personal capacity, has applied to the RBI for approval to acquire a stake in Perfect Finance & Investments Private Limited, ”the company told ET in an email.

Cred did not comment on the request for his account aggregator license application.

An account aggregator license will allow customers to access, on a consent basis, account history, which will allow different lenders who join the aggregation platform to automate their loans.

PhonePe, backed by Walmart and Flipkart, recently got approval in principle for the same.

At a time when credit card issuers charge extremely high rates for rollover and EMI installations, there is an opportunity to provide cheaper and transparent credit to the premium segment, an industry expert said.

In October, Cred closed a $ 251 million fundraiser in what was its third fundraiser this year, bringing its valuation to $ 4 billion.

Existing investor Tiger Global and Falcon Edge co-led the Series E funding round, which also included Marshall Wace and Steadfast Venture Capital, DST Global, Insight Partners and others.

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