Peak XV-backed digital banking firm Freo is set to join a growing list of startups seeking to return to India, people aware of the development told Moneycontrol.
The company, operated by Singapore-headquartered MyCash Fintech, has initiated internal discussions to shift the domicile to India amid a growing Indian financial market base and better valuations.
“Though at an early stage, the firm has initiated discussions to flip to India from Singapore. Several fintech firms today are doing this as it is easier to expand and even think of an IPO here. The process is in very early stages and will take a few months to get into shape,” a source told Moneycontrol.
The move also comes at a time when the NBFC-backed neobanking platform reported “sustainable profits” since December 2023, while the gross revenue for the financial year 2023-24 came in at Rs 350 crore, the firm said in a statement. It claims to have managed to maintain a positive contribution margin for three consecutive years.
Freo declined to comment on the developments.
Also Read: Tiger Global-backed Groww moves domicile from US to India
Co-founded by second-time founders and Indian School of Business alumni Anuj Kacker, Kunal Verma and Bala Parthasarathy in 2015, the started journey as MoneyTap, which offered personal loans. The firm later transitioned to digital banking firm called Freo. Both Freo and MoneyTap are operated by Mwyn Tech in India..
Freo has grown into a neobank, offering lending, savings and wealth-growth products in contrast to its peers such as Jupiter and Fi, which got NBFC licences to give direct loans recently.
It offers digital savings account, a personal credit line via MoneyTap app, pay later, UPI payments, and credit score.
Personal loans are offered through Freo’s in-house NBFC as well as in co-lending partnership with financial institutions such as SMFG, RBL Bank, InCred Finance and Credit Saison.
It has scooped up nearly 11 million customers within five years of operation and claims to be profitable since December 2023 with a 5X revenue surge year-on-year. It claims to have around 25 million users.
The firm has raised over $46.3 million in six rounds from investors such as Peak XV, Prime Venture Partners, ADQ, and SIDBI, data from market Intelligence platform Traxcn shows.
Reverse flip spree
Flipping back brings various advantages to startups, including tax benefits. It also coincides with a series of policy changes aimed at easing the transition.
Startups also reverse flip to go for an IPO in India.
Recently, the corporate affairs ministry exempted overseas startups looking to merge with their wholly-owned Indian subsidiaries from seeking clearance from the National Company Law Tribunal (NCLT).
The rules, effective from September 17, require Reserve Bank of India’s approval for such mergers along with a nod from the government. These changes aim to address delays caused by the overburdened NCLT.
While companies like PhonePe, Groww and Pepperfry have completed the relocation, others such as Pine Labs are in the process, as NCLT examines their applications.
Other players such as Razorpay, Meesho, Kreditbee, Eruditus, Zepto, Flipkart and Khatabook are also considering similar moves.
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