The Securities and Exchange Board of India (SEBI) has approved Sachin Bansal's fintech startup Navi Technologies for an Initial Public Offering (IPO), providing the Flipkart co-founder a boost as he works to create a financial services conglomerate.
In March of this year, Navi Technologies submitted draft papers to SEBI in order to raise up to Rs 3,350 crore through a fresh issue of shares. The IPO will not have an offer for sale (OFS) by shareholders, read Bansal who holds a 97.39 percent stake in the fintech.
The fintech firm received an observation letter in response to its filings on September 5, according to the SEBI website.
According to the DRHP, the fintech company plans to invest the proceeds of the IPO in Navi Finserv and Navi General Insurance companies in addition to general expansion goals.
Bansal and Navi Technologies have been contacted by Moneycontrol regarding the approval; a comment is awaited.
The approval is a relief for the fintech firm after the Reserve Bank of India (RBI) rejected its application for a banking licence through its wholly-owned subsidiary Chaitanya India Fin Credit as well as petitions from five other applicants.
Navi Technologies is a tech-driven financial products and services company. Since the company's founding, it has increased its product offerings to include mutual funds, general insurance, house loans, and personal loans. Additionally, it provides microloans via Chaitanya India Fin Credit.
While Navi registered a profit of Rs 71.1 crore in FY21, the company incurred losses to the tune of Rs 206.42 crore in the first nine months of FY22.
Microfinance loans are Navi's largest market segment; in Q3 of FY22, the company had assets under management (AUM) worth Rs 1,808 crore. The vertical's gross non-performing assets (NPAs) were 3.83 percent in the same period. Gross NPAs for personal loans were 1.12 percent.
Bansal stated in a September 2, 2021 interview with Moneycontrol that he likens Navi, which is short for "navigator," to banks and NBFCs.
“We are trying to work backwards and see what a bank for a billion people looks like. It has to be a lot more automated, things have to be a lot more simple, users should be able to help themselves. Banking should be as easy as going on Swiggy and ordering food,” he said.
Bansal founded Navi Technologies in December 2018 just six months after quitting his first venture, Flipkart, which was snapped up by Walmart for $16 billion the same year.
Incidentally, Bansal held only 5.5 percent stake in Flipkart before his exit. This stands in stark contrast to Navi, where Bansal holds a 97.39 percent stake, choosing to raise further funds through an IPO rather than through private investors.
Go Digit General Insurance, led by veteran insurance executive Kamesh Goyal and backed by Prem Watsa's Fairfax Capital, is still awaiting approval. According to information on the market regulator's website, SEBI has not yet provided observations for the IPO of Go Digit.
Go Digit General Insurance did not comment on the update.
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