InCred Financial Services Ltd, the KKR-backed fintech startup that earned its unicorn status in 2023, is gearing up for a significant milestone in its journey: an initial public offering (IPO). The company aims to raise between ₹4,000 crore and ₹5,000 crore (approximately $471 million to $588 million) with its anticipated IPO, slated for late next year. This offering would place InCred's valuation between ₹15,000 crore and ₹22,500 crore (around $1.78 billion to $2.6 billion), marking a significant step toward solidifying its place in India's growing financial services market.
The company is working diligently on this ambitious IPO, planning to finalize merchant bankers by January 2025. The goal is to launch the offering by Diwali 2025, signaling the start of a new chapter for the company and its investors. InCred, however, declined to comment on its IPO plans, maintaining an air of anticipation as it prepares for this major corporate move.
A Unicorn in the Making
InCred achieved its unicorn status in December 2023, after raising $60 million from a group of high-profile investors. Among the key backers were Ranjan Pai, Chairman of Manipal Education and Medical Group, who invested $9 million, and Ravi Pillai, Chairman of RP Group of Companies, who injected $5.4 million into the venture. Along with these prominent investors, Ram Nayak, Global Co-Head of Deutsche Bank, contributed $1.2 million.
The rapid rise of InCred into the unicorn club speaks volumes about its business model and the trust placed in its leadership. Founded in 2017 by Bhupinder Singh, a former co-head of banking and markets for Asia Pacific at Deutsche Bank, InCred Financial Services has expanded significantly in just a few years. Singh, now the largest individual shareholder with an 18.9% stake, has helped grow the company's assets under management (AUM) to nearly ₹10,000 crore. The company specializes in a range of financial products, including personal, education, and small business loans.
In addition to its core lending business, InCred has diversified into other areas of financial services. The company operates InCred Finance for lending, InCred Capital for institutional wealth and asset management, and InCred Money, a digital investment distribution platform. This diversification strategy has helped position InCred as a player with a broad portfolio in India's growing financial sector.
The Growing Need for Capital in the NBFC Sector
The Indian non-banking financial company (NBFC) sector has been under increased scrutiny by the Reserve Bank of India (RBI), which has highlighted potential stress within the industry. With that in mind, accessing public capital through IPOs is becoming an attractive option for many companies like InCred. According to Arka Mookerjee, Partner at J. Sagar Associates, public capital would allow NBFCs to build a stronger capital base to support growth in the near future.
InCred's IPO plans are designed to tap into this growing need for capital. The company is expected to include an offer-for-sale (OFS) component in its offering, allowing its promoters, including global private equity firm KKR, to sell part of their stake in the company. As of September, InCred’s CEO, Bhupinder Singh, confirmed that the company would go public once KKR, which holds a 13.4% stake, agrees to sell its shares during the IPO.
The merger between InCred Finance and KKR India Financial Services in 2022 laid the groundwork for the creation of InCred Financial Services as a joint entity. This partnership helped solidify InCred's position in the financial services sector, and with the upcoming IPO, it is poised to take advantage of the expanding capital markets.
A Vision for Diversification and Growth
InCred's path forward is marked by a vision for diversification across various financial segments. Beyond lending, the company is exploring opportunities in insurance and asset management. InCred has been in talks with a foreign partner to establish a general insurance joint venture and is also considering the launch of its own mutual fund house. This strategy aligns with Singh's broader goal of building a comprehensive financial services ecosystem that spans lending, asset management, and wealth management, among other segments.
InCred’s impressive growth trajectory is evident in its recent financial performance. For the fiscal year 2023-24, the company reported a sharp increase in operating revenue, rising to ₹1,270 crore from ₹864.6 crore the previous year. Net profit surged as well, jumping to ₹316.3 crore from ₹120.9 crore, signaling strong financial health and robust operational performance.
Looking Ahead
As InCred prepares for its IPO, it faces an exciting future full of potential. The company's rapid growth, coupled with its diversified financial services portfolio, positions it as a strong contender in the competitive Indian financial services landscape. By targeting a Diwali 2025 IPO launch, InCred aims to not only raise capital but also establish itself as a key player in the public markets.
For investors, the upcoming IPO presents an opportunity to participate in the next phase of InCred's growth, while the company itself stands to benefit from the increased capital base to fund its expansion and innovation. With a successful IPO on the horizon, InCred Financial Services is set to continue its impressive journey as one of India's leading fintech companies.
As the countdown to Diwali 2025 begins, all eyes will be on InCred, watching as it takes the next step in its journey toward becoming a powerhouse in the Indian financial sector.
Comentarios