The business said on Friday that Fullerton Financial Holdings (FFH), an existing investor in MSME lender Lendingkart, had purchased a majority interest for Rs 252 crore. After the agreement receives regulatory clearance, FFH, a wholly-owned independent portfolio business of Temasek, an investment firm with its headquarters in Singapore, will acquire a majority stake in Lendingkart. As of March 2024, Fullerton owned 38.16 per cent of the firm.
Hon. Ping Yeo, CEO of FFH, commented on the purchase, saying, “Our investments in Lendingkart are a testament to our continued belief in the MSME opportunity in India and that well-run, scalable franchises can bring significant value to small businesses.”
Lendingkart was founded in 2014 by Harshvardhan Lunia. To date, FFH, Bertelsmann, Mayfield India, Saama Capital, Sistema Asia, India Quotient, and other investors have invested around Rs 1,050 crore in the company. With this investment, Lendingkart’s potential to revolutionise MSME financing is acknowledged. In the Indian financial industry, we want to repeat FFH’s previous achievements,” stated Lendingkart’s founder and managing director, Harshvardhan Lunia.
Notably, the rating agency ICRA changed its assessment of Lendingkart Finance’s long-term ratings from positive to stable in July of this year. This change was made because of a “weakening in asset quality, driving weak profitability of the Lendingkart Group.” The prognosis also took into account Lendingkart Finance’s short-term fundraising efforts and the backing of FFH, the company’s main shareholder.
According to ICRA, “the company experienced pressure on asset quality in FY2024 primarily due to the challenges related to collections, which resulted in elevated credit costs.” Furthermore, the agency reported that the group’s managed gearing increased to 9.3 times as of March 31, 2024, from 6.3 times as of March 31, 2023, on a consolidated basis. This increase was attributed to the co-lending portfolio’s significant growth, weak internal accruals, and the lack of a capital raise in FY2024 to support the growth.
According to the ICRA report, Lendingkart Technologies, the holding company, had a dramatic decline in profit after tax, from Rs 119 crore in FY23 to barely Rs 3 crore in FY24. On a consolidated basis, total income climbed to Rs 1,218 crore from Rs 858 crore in FY23. Lendingkart Finance, on its own, had a drop in net profit to Rs 60 crore in FY24 from Rs 116 crore in FY23. The Lendingkart Group has disbursed more than 3 lakh loans totalling more than 20,000 crore since its founding.
