Three years after starting Navi Technologies with his college friend Ankit Agarwal, Flipkart co-founder Sachin Bansal is preparing for a big-bang initial public offer of the tech-driven financial services startup which turned profitable in FY 21, multiple sources in the know told Moneycontrol.
“They have shortlisted investment banks and the deal is likely to be kicked off this week,” said one of the persons cited above.
A second person told Moneycontrol that Axis Capital, ICICI Securities, BofA Securities and Credit Suisse have come on board as advisors and more banks could be added if required.
“Rather than tapping private equity investors, they prefer to unlock value via a public listing. It is likely to be a primary offering with proceeds used for growth capital. They want to grow fast from here,” said a third person adding that a DRHP
(draft red herring prospectus) may be filed with Sebi before the end of the current financial year.
A fourth person familiar with the firm’s listing plans said Navi has a lending book so in that sense it’s different from many fintech firms. “Plus, Sachin’s execution capabilities are well known,” he added.
According to a fifth person, the “seasoning of the business model” has taken place in the case of Navi Tech which has gone through a few cycles of lending via the digital route.
This fifth person added that no final call had been taken yet on the size of the issue but preliminary indications suggested a quantum of around $500 million. “It has not been frozen and may go up or vary at a later stage,” he said.
Navi’s has opted for the inorganic route in the past to enter segments and its businesses include lending, general insurance, mutual funds, and microfinance. The firm is awaiting approval from the RBI for a universal banking licence to build a bank from the ground up, utilising the technology stack built in-house. It also has a stockbroking licence from Sebi.
All the five persons above spoke to Moneycontrol on condition of anonymity.
In response to an email query from Moneycontrol, Credit Suisse and ICICI Securities declined to comment. Mails sent to Navi Tech, Axis Capital and BofA Securities remained unanswered at the time of publishing this article.
THE NAVI STRATEGY
In an interview to Moneycontrol dated September 2, Sachin Bansal had said he compares Navi (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 added that the company’s microfinance loan book stood at Rs 1,500 crore and non-microfinance loan book at Rs 600 crore. Overall, the startup was disbursing loans worth Rs 350 crore a month, according to him.
In the insurance space, Navi Tech competes with the likes of Policybazaar, Digit and Acko, while in the mutual fund space, it has peers like Paytm, Groww and Zerodha.
NAVI AND THE NUMBERS
Navi Technologies posted a consolidated profit of Rs 71 crore in FY21 and had posted a loss of Rs 8 crore in the previous financial year. With increasing digital adoption during the pandemic, its revenues spiked by 143 percent (Rs 137 crore versus Rs 56 crore on a YoY basis
Total income rose by 251 percent, up from Rs 221 crore in FY20 to Rs 780 crore in FY21. Expenditures also grew by 217 percent from Rs 212 crore to Rs 673 crore year-on-year (YoY).
Recently, the firm’s mutual fund arm filed for a blockchain