Digital lending firm Capital Float, which counts Amazon and Sequoia Capital among its existing backers, is in talks with Naspers for an acquisition deal. Three sources emphasised that the Bengaluru-based company was engaged for potential $100-150 million round from PayU (fully owned subsidiary of Naspers).
“Instead of investment, Naspers has shown interest in a complete acquisition,” said aforementioned sources. While Capital Float was trying to raise fresh capital at a valuation of between $500 to $550 million, Naspers/PayU didn’t agree to it.
“Naspers wasn’t ready to give half a billion USD valuation as Capital Float’s loan book isn’t as healthy as it was expected or projected. The firm has a double-digit NPA rate (about 15-18%),” added sources. They requested anonymity as they aren’t authorised to speak to the media.
A recent report in The Ken also outlined that Capital Float had issued Rs 400 crore loans to parents buying BYJU’s subscriptions or their wards. A decent portion of this particular loan book is stressed. “Stressed assets has soured its attempt of independent fundraising from Naspers,” emphasised sources.
According to sources, the talks has progressed into a fairly advanced stage. “The due diligence for acquisition is almost completed and the value of the transaction would be in the range of $350 to $380 million,” added sources.
If nothing goes wrong from here, the transaction would be completed by July. Existing investors such as Amazon, SAIF Partners and Sequoia will be exiting if the deal goes through, outlined sources.
A detailed questionnaire sent to Capital Float on Wednesday is yet to garner any response. “It is the company’s policy to neither acknowledge nor deny its involvement in any merger, acquisition or divestiture activity nor to comment on market rumours,” said a Naspers spokesperson in an email response.
Naspers has been betting big on India and it’s reportedly eyeing $1billion worth fintech deals this year. Acquisition of Capital Float does make sense for the multinational Internet and media group. “Lending is where fintech companies are going to make money. Capital Float completes the missing fintech play for Naspers,” outlined sources.
Capital Float is among the best-funded fintech startups in India among apps like InCred, Qbera, etc. Till now, it has raised about $107 million from the aforementioned investors. Non-Banking Financial Corporations (NBFCs) have been experiencing a tough time as investors aren’t as bullish as during 2017-18 period.
Not only Capital Float, but firms such as Lendingkart, Kishht and Rubique are also finding it difficult to raise equity capital. Lendingkart was looking for a risk capital form months and recently resorted on venture debt while Rubique had laid off employees and cut down burn rate. Rubique is also in the market for a long time for raising follow-on round.