Talks with Axis Bank are at an early stage and the modern consortium of investors is finalizing its plans, they said.
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“Pai’s office is considering investing in Rupeek, but the amount has not been determined yet,” one of the people said. “The participation of Axis Bank will also be crucial for the transaction. The valuation will be around $200-250 million.”
As part of this round, existing investors will also partially sell shares.
According to Registrar of Companies (RoC) filings, on March 20, 2024, Rupeek had raised around Rs 50 crore from asset management firm 360 One, formerly known as IIFL Wealth. It is raising modern capital at a discount of approximately 60% from its July 2022 high valuation of $600 million.
A hit with investor sentiment
On March 15, ET reported for the first time about a potential downward round in Rupeek, which was caused by the slowdown in activity and regulatory restrictions on the sector.
A down round occurs when a company raises modern capital at a lower valuation than the previous one.
Pai from Manipal declined to comment. Rupeek CEO Sumit Maniyar and Axis Bank did not respond to queries.
Axis Bank intends to build deeper integration with Rupeek to develop an instant gold loan for its customers, similar to that of Federal Bank and others, said the people cited above. The lender has witnessed sturdy growth in gold loan disbursements, which is already increasing at a compound monthly growth rate of 94% in the last six months of FY24.
“The investment may be part of the partnership that Rupeek is building with Axis Bank for gold lending. However, the talks are still at an early stage, said a person familiar with the situation.
According to RBI data, outstanding gold loans crossed Rs 1 lakh crore in March compared to Rs 89,382 crore in the previous year.
In March, the RBI asked IIFL Finance to stop offering gold loans to its customers. On May 1, ET reported that the central bank had also raised concerns about gold loan disbursement by banks through fintech partnerships.
“The regulatory environment has had a broader impact on investor sentiment as well as future growth prospects,” said a fintech investor aware of the likely deal. “This is reflected in modern financing valuations.”
The Bengaluru-headquartered startup also saw a slowdown in disbursements, with assets under management (AUM) remaining almost unchanged at Rs 1,659 crore in December last year compared to Rs 1,669 crore in March 2023. Asset quality, however, improved with over 90 days at 2.3% in December compared to 4.1% nine months earlier.
Since its founding in 2015, Rupeek has raised approximately $164 million from companies such as Accel, Bertelsmann and others.
PayU-backed Indiagold and Oro Money are among other startups in the industry.
Venture-backed startups such as Udaan, Byju’s, ShareChat and PharmEasy have also seen significant declines in valuations due to macroeconomic changes in the market as well as adjustments in valuations based on growth potential over the past year.
Several well-funded startups such as Swiggy, Pine Labs and Meesho have also seen their US investors adjust valuations in regulatory filings.
