Fintech unicorn Cred raises $80 million from GIC, others at $6.2 billion valuation

CRED founder CEO Kunal Shah

Credit card payment platform Cred has raised $80 million as a part of its Series F funding round led by Singapore’s sovereign wealth fund GIC, along with participation from existing investors, the company’s filings with the Ministry of Corporate Affairs (MCA) showed.

According to Moneycontrol estimates, the Kunal Shah-led company has raised the money at a valuation of almost $6.22 billion. The valuation was calculated on the basis of the last closing price of the rupee versus the US dollar. 

Existing investors Tiger Global, Sofina Ventures, Alpha Wave Ventures and DF International also participated in the funding round. The regulatory filings further showed that Cred may raise more funds as a part of its Series F funding round.

Moneycontrol had reported in February that the fintech company is in talks to raise $300 million at a valuation of over $6 billion. The new round was expected to be led by a crossover fund from the Middle East, while existing backers Tiger Global Management and Falcon Edge Capital (Alpha Wave), Moneycontrol had reported citing sources.

In a statement, Cred said that it is raising its Series F investment, which will value the company at around $6.4 billion. The fintech unicorn said it plans to raise $140 million in this round with GIC leading it, along with existing investors Sofina, Tiger Global, FalconEdge, and Dragoneer. The round will also have a secondary component, Cred said, without disclosing further details.

As a part of the transaction, Cred has allotted 42,308 Series F compulsory convertible preference shares (CCPS) of face value of Rs 100 each at a premium of Rs 1,47,746 for consideration of Rs 617 crore ($79.25 million) in cash.

The company will use the funds for expanding its business and for 'future growth' including meeting long-term and short-term funding requirements and general corporate purposes, according to the regulatory filings.

News agency Entrackr reported the development first saying that the company has raised funds at a valuation between $6.2-6.5 billion.

Cred, founded by serial entrepreneur Kunal Shah, started in 2018 for India's most credit-worthy individuals to pay their credit card bills and earn points. It has since expanded into lending, e-commerce payments, advertising for brands, and providing short-term credit via Buy Now Pay Later (BNPL) options.

In the last one and a half years, Cred has built a loan book of over Rs 2,000 crore, likely with low defaults since it caters to highly credit-worthy customers. Its payments business Cred Pay also processes transactions worth $500 million a year - Gross Merchandise Value on which it doesn't make money yet.

Cred is also pitching to investors that it can become like Affirm, the US-based company which allows BNPL for online transactions. Affirm is currently trading with a market capitalization of a little over $6 billion. The company, however, had got listed at a market capitalization of $24 billion.

Cred was valued at $4 billion in October last year when it raised $251 million from its existing investors.

Shah, one of India’s best-known new-age entrepreneurs and a prolific angel investor, is also ramping up Cred's commerce play by onboarding multiple online-only consumer brands on its platform. It recently introduced a zero commission Cred store onboarding platform, waiving off listing fees for onboarding and commissions from any sale for all brand partners.

While Cred has rapidly expanded into payments, lending, investment, and commerce, it remains to be seen how it will effectively cross-sell, upsell and monetize each of these engines.

Moneycontrol had reported in March that Cred's losses widened by 45 percent year-on-year to Rs 524 crore for the period ended March 31, 2021, from Rs 360 crore a year ago, even as the company's revenue grew 5x to Rs 18.16 crore.

Cred's fundraise comes at a time when the overall funding to India's startups has slowed down amid a correction in valuations of tech startups across the globe. Many large private equity and venture capital firms including Tiger Global and SoftBank have also cut their cheque sizes for high growth companies.