Digital lending platform Mintifi to raise $60 mn at $350 mn pre-money valuation

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International Finance Corporation (IFC)-backed Mintifi is in initial talks to raise at least $60 million at 2x of its existing valuation as the digital lending platform for retailers and distributors looks to shore up equity to expand its lending book to as much as $1 billion, two people aware of the matter told Moneycontrol.

The company, which counts Norwest Venture Partners, Elevation Capital and Lok Capital as its backers, is eyeing a pre-money valuation of $350 million, the people said, requesting anonymity. Mintifi has hired investment bank Avendus Capital as an exclusive financial advisor for the deal, the people added. Mintifi was last valued at about $150-200 million when it raised $40 million exactly a year back from Norwest and Elevation.

Pre-money valuation, simply put, is the difference between the company’s post-money valuation and the investment amount. Post-money valuation is the funding raised divided by the percentage of the stake diluted.

“Companies like Mintifi need to have a higher net worth and so they need to raise equity, which enables them to raise debt to disburse loans, ” said one of the people quoted above. “Mintifi is aggressively looking to build a large lending book and so the equity fundraise is vital for it.”

Mintifi’s deliberations are still ongoing and fairly at an early stage, with the company being involved with at least four investors, the people quoted above said. The final funding amount and the valuation can go a notch higher as well.

Mintifi and Avendus Capital declined to comment on the story.

The company’s fundraise comes at a time when the Reserve Bank of India (RBI) and the Ministry of electronics and information technology (MeITY) have cracked down on digital lending applications due to concerns over “national security.” Earlier this month the MeiTY blocked 94 ‘unregulated’ loan apps over alleged links to China. However, most of the blocked loan apps cater to personal lending, a category Mintifi does not serve.

“There are some basic concerns over what happens to digital lending due what happened recently,” said the second person quoted above.

“But what investors are betting on is the lending space rather than anything else. This is not going to go anywhere. Banks, NBFCs (non-banking finance companies) have been doing it for ages and so optimism continues on this space,” the person added.

Founded in 2017 by Anup Agarwal, Ankit Mehta and Sanjoy Shome, Mintifi works with large companies and extends credit in exchange of supplying inventory across their supply chain network, including to distributors and retailers. Its clients include Tata Motors, Bridgestone Tyres, Berger Paints, Polycab, NIVEA and Jockey. When it last raised funds, the company was eyeiing loan disbursals of as much as $1 billion by 2023.

Before raising funds from Norwest and Elevation, Mintifi raised equity and debt to the tune of $60 million.

The SME (small medium enterprise) digital lending space has seen immense growth over the past three years after an initial slowdown in 2020 due to the onset of the coronavirus pandemic. Most players like Rupifi, RazorpayX and KredX lend in partnerships with banks. Others like Lendingkart and NeoGrowth Credit lend from their books too, besides through partnerships.

The space is set to grow as banks and NBFCs are willing to deploy a large amount of liquidity through partnerships—a model that enables them to lend while not taking the risk on their books entirely.