IndiaMART, BEENEXT Invest INR 38 Cr To Acquire Additional Stake In TReDS Platform M1xchange

B2B ecommerce major IndiaMART and VC firm BEENEXT have acquired additional stakes of 3.4% and 1.99%, respectively, in Mynd Solution’s M1xchange for a total of INR 38 Cr. The transaction also marked the exit of India Opportunities Fund of SIDBI Venture Capital Limited, an early investor in the company.

Mynd Solutions operates M1xchange, a digital marketplace to sell receivables to banks/ financial institutions, setup through the approval of the Reserve Bank of India (RBI). The Trade Receivable Discounting System (TReDS) platform was set up under the Payment and Settlement Act, 2007 to facilitate discounting of invoices and bills of exchange for MSMEs on a pan-India basis.

Mynd Solutions claims to have 48 banks and financial institutions on the platform.

TReDS is an institutional mechanism set up in order to facilitate the financing of trade receivables of MSMEs from corporate buyers through multiple financiers.

“M1xchange has improved liquidity for Indian MSMEs by enabling discounting of trade receivables at competitive rates. The discounting is based on credit rating of the MSME’s customer and therefore cost of finance is very cheap. This makes MSME more competitive in pricing to its customers,” Sundeep Mohindru, CEO of M1xchange, said.

According to Mohindru, banks have also benefited from M1xchange as it has opened a new avenue of business for them. In addition, repayments of trade receivables financed are fully digital and the default on repayments is negligible, he added.

Last year, IndiaMART invested INR 32.4 Cr to acquire a stake in Mynd Solutions in a deal that provided a partial exit to SIDBI Venture Capital Limited.

“Indian businesses have diverse credit needs. Low cost working capital finance provides liquidity to businesses, especially small and micro businesses. This investment is in line with IndiaMART’s long term objective of making business easy for Indian businesses,” Dinesh Agarwal, founder and MD of IndiaMART, said.

Beenext Asia participated in the $4.5 Mn funding round of M1xchange in 2020.

Currently, there are three operating TReDS platforms in India, including Invoicemart, M1xchange, and RXIL, which have been running since 2017. C2FO Factoring Solutions Private Limited recently received an in-principle approval from the RBI to set up a TReDS platform in India.

For RBI, the objective of introducing TReDS was to facilitate financing of invoices/ bills of MSMEs drawn on corporate buyers by way of discounting by financiers. Only MSMEs can participate as sellers in TReDS, while corporates, government departments, PSUs and any other entity can participate as buyers in TReDS.

IndiaMART, which is listed on the exchanges, reported a 16% year-on-year decline in its consolidated net profit at INR 68.4 Cr during the September quarter of FY23. Operating revenue surged 32% to INR 240.6 Cr.

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