Amazon and Sequoia India-backed online lending platform Capital Float has acquired personal finance management startup Walnut for $30 Mn in a cash-and-stock deal.
Capital Float expects the acquisition to help strengthen its new consumer-lending business. Post-acquisition, Walnut’s founders Patanjali Somayaji and Amit Bhor will join the leadership team of Capital Float along with their team of 35 employees.
“We’re excited to collaborate with Walnut, an accomplished member of the Fintech ecosystem. Our sensibilities and objectives aligned with theirs, which largely paved the way for our decision to join hands with the company. We were extremely impressed with the team and the product Patan and Amit have built. Walnut Prime is a product of deep interest to us, and it will essentially become a new addition to our stable of exceptional, customized credit products,” said Sashank Rishyasringa and Gaurav Hinduja, co-founders of Capital Float.
Capital Float has till date raised $117.7 Mn funding including $22 Mn from Amazon in Series C round of funding and $7.2 Mn debt investment from Netherlands-based Triodos Investment Management.
Earlier reports had surfaced that InCred was looking to invest $7.3 M in Walnut.
Patanjali Somayaji and Amit Bhor, co-founders of Walnut said, “Since we launched Walnut, we have been focused on simplifying personal finance for our users. We’re excited to partner with Capital Float as we aim to exponentially grow and bring Walnut and its intuitive features to millions of more Indians. We believe having Capital Float on our side opens up an immense set of opportunities by leveraging their strength in online lending and financial products with our innovative approach to consumer experiences.”
Walnut: Personal Finance Management
Founded in October 2014, Pune-based Walnut offers a personal finance management solution through a mobile application. It allows its users to split funds between friends, do bill payments, track spends and check card and bank balances and do peer to peer transactions.
With around 7 Mn app downloads and about 1 Mn monthly active users and 300K daily active users, Walnut had recently launched Walnut Prime which allows its users to access consumer loans up to INR 1 lakh to be directly moved into their bank accounts.
During the demonetisation period, Walnut had offered a queue management system which helped its consumers find out about queue at a specific terminal and availability of cash.
How Capital Float Plans To Leverage Walnut Tech?
Capital Float will employ Walnut’s credit assessment model, which captures data from alternative sources such as income and purchase capacity, to extend credit lines to new customers.
“The Walnut team already has around $14.35 Mn (INR 100 Cr) of credit line approved for customers on its mobile app, and as part of the acquisition we would like to push up those numbers,” said Hinduja.
With this acquisition, Capital Float wants to increase its total assets under management to $717.4 Mn (INR 5,000 Cr) within a year from $186.52 Mn (INR 1,300 Cr), and expand its customer base to 500K from about 125K now.
About 30% of the company’s assets under management are in the consumer loan portfolio, Hinduja said.
Also, Capital Float plans to leverage its presence in 100 locations in the country to expand Walnut’s coverage significantly from around eight locations currently.
Wealth Management Industry
Most recently, we have seen giants like Flipkart and Paytm testing the waters in the financial advisory or wealth management segment as well.
Paytm has set up its financial products arm Paytm Money Ltd, to focus on building its investment and wealth management products for its users. Paytm Money has already registered more than 5 Lakh (half a million) users.
Flipkart too silently launched its investment firm, Sabin Advisors, with speculation indicating that all Flipkart investments may be routed through this setup.
Some of the other startups in the space include Fisdom, WealthTrust, Tipbazaar, and Scripbox.
Further, the Indian fintech software market is forecast to cross $2.4 Bn by 2020, according to a report by KPMG India and NASSCOM. India is currently home to more than 500 fintech startups.
The sector continues to witness growth, as according to the Inc42 Indian Tech Startup Funding Q1 2018 report, fintech as a sector witnessed the highest funding in the first quarter.