Fintech unicorn Slice to merge with North East Small Finance Bank

Fintech unicorn Slice and North East Small Finance Bank (NESFB) have announced their merger in a move to expand their financial accessibility.

According to Slice, it has received a nod from the Reserve Bank of India (RBI) for the transaction. In March, Slice acquired a 5% stake in Guwahati-headquartered bank for about $3.42 million. This roughly valued the small finance bank at $68.4 million.

Customers of both entities will have a broader range of products, omnichannel offerings, and a seamless experience in the future, the company said in a press release.

Commenting on the merger, Slice's CEO Rajan Bajaj said, “... This approach allows us to serve a wider audience, including those often overlooked, while also building a deep emotional connection with our customers. We will further strengthen our risk underwriting through the use of technology and data, and always keep customers at the heart of our decisions.”

This is a significant development for the fintech industry, which has been going through a tough phase. Following the notification of RBI in June 2022, Slice has switched from providing credit lines through its app to term loans. In its notification, RBI had clarified that prepaid instrument (wallet) providers such as Slice are not allowed to offer credit lines.

It was a major setback for the company which has raised more than $340 million to date including a $220 million Series B round led by Tiger Global in November 2021. The round also helped the company to enter the club of unicorns. It was valued at $1.5 billion-$1.7 billion during Series C round.

As per data intelligence platform TheKredible, Gunosy Capital is the largest stakeholder in the company with 14.84% stake. The company’s co-founder Bajaj holds 8.21% stake. The complete shareholding pattern can be checked here.

The firm is yet to file its FY23 numbers but sources outline that its revenue spiked almost three-folds and stood at around Rs 870 crore in FY23. According to TheKredible, its operating revenue grew 4.18X to Rs 283.08 crore during FY22 from Rs 67.7 crore in FY21 while Slice losses also elevated 2.52X to Rs 253.67 crore in FY22.

North East Small Finance Bank registered Rs 314 crore in revenue in FY22 with a loss of Rs 75.96 crore. The firm has not filed its latest financial (FY23).

Update at 6 pm: The post has been updated to include NESFB's FY22 financials.