Warburg Pincus To Acquire Majority Stake In Lendingtech Startup Vistaar Finance

New York-headquartered private equity firm Warburg Pincus is acquiring a majority stake in Vistaar Finance. The acquisition deal is subject to regulatory and certain other approvals. 

Vistaar Finance which is a NBFC serving the MSMEs will give exit to its existing shareholders – Westbridge Capital, Elevar Equity, Omidyar Network India, and Saama Capital. Kotak Investment Banking acted as a financial advisor to this transaction. 

Commenting on the development, Narendra Ostawal, managing director, Warburg Pincus said, “We believe micro-enterprises in semi-urban and rural India are underserved by formal sources of credit and we believe Vistaar has the potential to fulfill that need gap and be a driver for broad-based growth on those regions and communities. Warburg Pincus has a deep history in partnering with exceptional teams, particularly within financial services and looks forward to a similarly exciting future at Vistaar.”

Vistaar Finance was founded by Brahmanand Hegde & Ramakrishna Nishtala in April 2010. The Bengaluru-based lendingtech startup offers secured loans to micro, small and medium enterprises across 12 states with 205 branches and over 2,100 employees.

Vistaar Finance claims to offer secured lending across ticket size categories through business and housing loans. The company ideally offers loans to shops, small manufacturing units, power looms, kirana /general shops, and home-based industries.

The acquisition news comes almost six months after it raised INR 150 Cr from Bank of Baroda. 

In the growing age of lendingtech, Vistaar Finance competes against the likes of Lendingkart, Capital Float, Clix Capital, SME Corner, among others.

Lendingtech is one of the fast growing sub sectors of the fintech sector in this country. One of the primary reasons behind the rise in the lendingtech is the time taking process undertaken by traditional banks for loan approval. Apart from this, traditional banks often hesitate to offer loans to MSMEs fearing NPA. 

As per the Inc42’s report, of $24 Bn raised by Indian fintech startups from 2014 to the first half of 2022, lendingtech sector has raised the most funding worth $6.7 Bn, which is 28.3% of the total funding raised. Even, when it comes to the number of deals, lendingtech stood on top with a total of 456 deals of the 1,200 deals in total between 2014 to first half of 2022. 

The report further highlights that the lendingtech sector is estimated to grow at 32% CAGR in next three years and will have a market opportunity of $616 Bn.