Mumbai-based non-banking finance (NBFC) company InCred is in talks with Qbera to pick up a majority stake in the Bengaluru headquartered digital lending startup, sources have said.
As talks were at an early stages, the exact amount at which the deal will happen is not known, but two of the sources valued it at anywhere between $10 million and $15 million. The valuation would be determined by future rounds of negotiations, they said.
"Qbera had been looking for additional equity funding for quite some time. Now that its existing investor is looking for an exit, an acquisition at a favourable value is the best way out for the founders of the company," said one of the sources. The source was referring to E-City Ventures that had invested $3 million in the online lending platform.
Qbera was looking at a $15-million series B round.
Qbera co-founder Aditya Kumar declined to comment on the talks or the acquisition plan. InCred had not replied to an email seeking its comments at the time of publishing of this story.
The success of the talks would hinge on multiple factors like final valuation and the future role of the Qbera founders, one of the sources said.
The digital lending sector had a stressful 2019, with the cost of credit shooting up, and acquiring quality borrowers becoming a challenge.
Several early-stage companies also shut shop or pivoted to separate businesses. Industry experts say 2020 could be a crucial year for the sector, which is bound to see mergers and acquisitions.
Qbera works with banks and NBFCs to process personal loans for employed and self-employed individuals. It has lent around Rs 200 crore, with the ticket size of loans hovering between Rs 1 lakh and Rs 15 lakh, Qbera says on its website. Its target base is salaried individuals not served by traditional lenders.
As of March 2019, Qbera's ownership structure was such that E-City Ventures, owned more than 50 percent of the company.
Founders Kumar and Anubhav Jain held less than 5 percent and 0.2 percent stake in the company that was valued at around Rs 32 crore ($4.4 million) after the latest round of funding in September 2018.
"InCred has a team with massive experience in the lending business, they might be acquiring Qbera for its technology platform, thereby driving its foray into the new-age digital lending business," said one of the sources.
InCred was founded by Bhupinder Singh, a former top executive at Deutsche Bank. It counts Canton Fitzgerald president Anshu Jain, a former co-CEO of Deutsche Bank, as its adviser.
The company recently raised Rs 600 crore in its Series A funding round led by Dutch development finance institution FMO. Moore Capital, Elevar Capital and Alpha Capital were the other large institutional investors.
After the acquisition, InCred could merge the Qbera business with its fintech lending arm, mValu Technology Services, sources said.
Elevar Capital last year pumped in $5 million in mValu.
"Qbera had approached Elevar Equity for funding, post which there were discussions of synergies between the two entities and a possible merger," said one of the sources.
If the deal goes through, it will be another major acquisition in the fintech lending space after Paysense was acquired by digital payments major PayU in January for $185 million.
Paysense, too, was providing personal loans to young consumers and leveraging technology to evaluate them and process applications.
Original Source: https://www.firstpost.com/news & analysis/qbera-could-be-merged-with-mvalu-the-fintech-lending-arm-of-incred-a-deal-valued-at-10-15-mn-7996611.html