IIFL Fintech Fund Acquires Majority Stake In Supply Chain Financing Platform Xtracap

Financial services major IIFL Group’s investment arm IIFL Fintech Fund on Wednesday (September 13) said it has acquired a majority stake in a supply-chain finance platform, Xtracap Fintech. However, the company did not disclose the financial or other details of the deal. 

Founded in 2017 by Mohammed Riaz and Nishant Singh, the Gurugram-based startup caters to the short-term working capital needs of businesses. Xtracap’s technology serves both downstream and upstream channel financing needs by offering e-invoice-based financing for small businesses. 

Commenting on the announcement, Xtracap Fintech cofounder and chief executive officer (CEO) Mohammed Riaz said “We are thrilled about the infusion of capital from IIFL Fintech Fund…. We are excited to continue driving financial inclusion and shaping the future of financial services.”

Chiming in, fund manager at IIFL Fintech Fund Mehekka Oberoi said, “Supply chain finance is nearly INR 10 Lakh Cr total addressable market of which approximately INR 1.2 L Cr is served today. This is a huge addressable market. Especially for distributors, which are not served by the banks… A tech-enabled solution can help reach the tail end of these distributors and give them access to finance. Xtracap’s technology-driven solution enables this.”

The fintech fund already boasts having fintech startups such as Trendlyne, Leegality, FinBox, DataSutram, Multipl, Finarkein, TrustCheckr, Finvu, Insurance Samadhan, and EasyRewardz in its portfolio. However, this is the fund’s first investment in a supply chain finance company.

Moving on, the fintech startup aims to target 2 Mn small businesses in small cities and towns of India in the next four to five years. Through its channel-based financing model, the startup aims to bridge the credit gap in the MSME sector by enabling suppliers and distributors to access working capital. 

The development comes at a time when the fintech fund has slowed down its deal-making spree, even as it completed a fundraising round last year. Taking a moderate approach, the firm has been treading carefully as it reportedly looks towards further valuation corrections in the market. 

Even as it waits, the Indian fintech space continues to be an attractive opportunity for domestic and global investors alike. According to an Inc42 report, the Indian fintech industry is likely to reach $1.3 Tn size by 2025, growing at a 31% CAGR by 2025. Of this, the lending tech is expected to capture 47% ($616 Bn) of the $1.3 Tn fintech market by 2025.