Lendingkart Seeks Down Round Amid Cash Crunch

Fintech startup Lendingkart, which focuses on micro, small, and medium enterprises (MSMEs), is reportedly looking to raise fresh capital at a lower valuation from its existing investor Fullerton Financial Holdings (FFH). 

As per an ET report, Lendingkart is eyeing this fund raise amid a cash crisis triggered by challenges in the unsecured loan market. 

The report, citing sources close to the development, outlined that the company’s valuation is expected to drop to $100 Mn from approximately $350 Mn in 2020. 

Inc42 has reached out to the company for comments on the development. The story will be updated based on the response. 

As part of the capital infusion, FFH is looking to up its stake to 60% from its current holding of 38%, the report added. Notably, to date, FFH has already injected around INR 772 Cr into the company.

On factors contributing to this capital raise, the report also added that Lendingkart is experiencing asset quality problems, with gross non-performing assets (NPAs) rising significantly. 

The increase in bad loans has increased its credit costs, further complicating its financial landscape. Besides, the changes in regulations by the RBI regarding first loss default guarantees have also negatively impacted Lendingkart’s capital position. 

This development comes close on the heels of Lendingkart raising $10 Mn (INR 83.5 Cr) in May via external commercial borrowing from a fund managed by Swiss impact investor BlueOrchard. However, the post-money valuation of the deal remained undisclosed then. 

Before this in 2023, the startup raised  $24 Mn debt from EvolutionX Debt Capital.

Founded in 2014 by Lunia, Lendingkart disburses loans to micro, small and medium enterprises (MSMEs). The startup has two main revenue sources – income from interest and financial services offerings. It claims to have disbursed 2.8 Lakh loans worth over $1.8 Bn across India since inception. 

It competes against the likes of Incred, Yubi, Indifi and Kinara Capital among others.

It is pertinent to note that Lendingkart turnaround its financial woes in FY23 after the pandemic gave severe blow to its business.  It reported a profit of INR 118.8 Cr in FY23 as against a net loss of INR 203.4 Cr in FY22, helped by a huge decline in its spending towards impairment loss on financial assets, loans and advances.

In the fiscal, Lendingkart’s operating revenue also jumped 29.5% to INR 798.4 Cr from INR FY22’s 616.4 Cr.

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