Kunal Shah's Cred to invest $10 mn in LiquiLoans to strengthen P2P lending capabilities

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Fintech platform Cred is looking to invest around $10 million to buy a minority stake in peer-to-peer (P2P) lending platform LiquiLoans, a deal that would help the Kunal Shah-led company strengthen its P2P lending product capabilities.

Cred's investment in LiquiLoans will value the company at about $200 million, the company said in a statement on September 16. The investment will enhance Cred's partnership with LiquiLoans, which enables Cred's users to participate in P2P lending opportunities through the Cred Mint product.

"Liquiloans has innovated in creating trust-centred financing products and is a leader in peer-to-peer lending with a strong management team. Their work has helped expand access to credit, and we look forward to partnering with them in their next phase of growth and innovation," said Kunal Shah, founder, Cred.

LiquiLoans claims to be profitable since its inception and said that its network has less than 1 percent NPAs (non-performing assets). The investment will help LiquiLoans strengthen its tech capabilities, the company said.

“We have partnered and will continue to partner strategically with entities that share a similar ethos. Our long-term relationship with Cred and this investment will accelerate our goal of creating efficiencies for seamless borrowing and investments,” said Achal Mittal, Co-Founder of Liquiloans.

Cred started out as a credit-card repayment platform that rewards users with points for paying their bills but has been adding products such as rent payments and personal loans, as it seeks to become a full-fledged financial services provider.

It had launched Cred Mint, a P2P lending product in August last year. Cred Mint was launched with Liquiloans, an RBI registered P2P non-banking financial company (NBFC), that counts Shah as an early investor in his personal capacity.

Cred Mint offers users returns of up to 9 percent per annum. Members can lend/borrow in between Rs 1 lakh- Rs 10 lakh in under two minutes, commission-free, and also request withdrawal in one click, partially or in full at any time with no penalty, and earn interest for the period invested.

Traditional P2P lending platforms have been moderately successful but drawn scrutiny because they attract borrowers with poor credit histories and low incomes. Shah hopes to flip this by allowing P2P lending among people who have a credit score of over 750- India’s most creditworthy citizens.

Cred, founded in 2018 by second-time founder Kunal Shah, has raised over a billion dollars in funding to date and is valued at about $6.3 billion. Cred counts Sequoia Capital, Sofina Ventures, QED Innovation Labs and Ribbit Capital among others as its backers. Cred had reported a revenue of Rs 95.5 crore in FY21 (2020-21) and a loss of Rs 523.9 crore for the year.