Also in the letter:
■ Eruditus gets $150 million
■ Infy, Wipro Q2 results
■ Zepto’s tapping family offices
Fintech firms’ NBFC co-lending biz under stress after RBI action
There could be a direct impact on co-lending arrangements after the Reserve Bank of India’s (RBI) action on Navi and DMI Finance, two major new-age lending companies, said industry insiders.
Regulatory action: The RBI on October 17 issued a notification asking Navi and DMI Finance to stop offering credit products from October 21, citing multiple lapses in compliance. Fintechs, which are anyway under stress because of the slowdown in the unsecured credit market, feel this will have a snowball effect on the larger sector.
Impact on players: Fintechs, which are used to fast growth, high interest rates, and quick credit underwriting, are being given the message by the RBI that the days of easy money are over and they need to slow down. Banks and NBFCs are also being instructed to slow down on credit disbursals as the RBI can see some early signs of stress building up in the system.
RBI on alert: The regulator has strengthened its supervision of NBFCs and other fintechs, said two people in the know. The audits have become stricter, and the regulator is probing deep into the companies, which is a marked shift from the past, they said.
P2P startups look to overhaul biz, processes amidst RBI crackdown
Peer-to-peer lending startups are still coming to terms with the latest observations on the sector released by the RBI on August 16. At the same time, they are also dealing with regulatory action against violations.
Driving the news: Many P2P platforms are working on restricting withdrawals and also overhauling their entire product journey to abide by stringent RBI rules on the sector. Players like Mobikwik, which runs Xtra, a P2P platform in partnership with Lendbox, have changed its withdrawal policy. Cred has stopped taking fresh deposits unless there is clarity.
Showcause notices: Responding to an RTI filing made by AltInvestor founder Yash Roongta, RBI has said that it has sent notices to four other P2P lending platforms. Mint wrote on Thursday that Faircent, Lendbox, RangDe, and Monexo have received the notices.
Sector under stress: The P2P sector has come to a grinding halt after the RBI cracked down on instant withdrawal products, secondary market trading of P2P assets, and mandated instant settlements between borrowers and lenders, thereby disrupting many business flows for these players.
Edtech company Eruditus secures $150 million at flat valuation of $3.2 billion
Ashwin Damera, founder, Eruditus
Executive education startup Eruditus has bagged new funding of $150 million led by TPG Rise, the impact investment fund from the US investor.
Details: The funding is at a flat valuation of $3.2 billion, post-money. TPG Rise has invested $100 million in this round. Other participating investors include SoftBank Vision Fund 2, Leeds Illuminate, Accel, CPP Investments, and the Chan Zuckerberg Initiative.
Eruditus may use some of this capital to service its debt, though the payment cycles are through the next two years.
What next: Founder Ashwin Damera told us that this round took the company a long time amid broader stress in the edtech sector in India. He added that the company will now start the flipping process to move domicile here from Singapore. ET first reported in January on Eruditus’ plans to shift domicile here.
Financials: “Fiscal 25—from June to July—will be nearly Rs 5,000 crore in revenue, and we should do about Rs 300 crore in Ebitda. We just turned profitable in FY24 at an Ebitda level. A company of our size, I think, we should keep some cash in hand—cash for M&A,” Damera said.
Following PhysicsWallah, this transaction marks the second significant deal in the education technology sector.
IT Q2 Results Corner
Salil Parekh, CEO, Infosys
Infosys: Infosys, India’s second-largest IT company, posted a 4.7% increase in September quarter net profit to Rs 6,506 crore, slightly below market estimates, from the year earlier. Some deal ramp-ups and an uptick in the key vertical of financial services lifted profit and revenue, which rose 5.1% from the year earlier and 4.2% from the preceding quarter, to Rs 40,986 crore.
Wipro: Wipro on Thursday posted a 21% year-on-year and 6.3% sequential increase in net profit for the second quarter, when three of its four strategic market units (SMUs) reported better performance and the company also saw improved execution levels and an expansion in margins. The fourth largest Indian IT services firm posted a net profit of Rs 3,227 crore for the quarter ended September 30.
LTIMindtree: LTIMindtree, sixth-largest Indian IT services company, reported a 7.7% year-on-year (YoY) rise in net profit at Rs 1251.6 crore. The profit compares with Rs 1,162 crore in September last year. The Mumbai-headquartered IT services company reported a 5.9% growth in consolidated revenues at Rs 9,432.9 crore in Q2FY25 as compared with Rs 8,905.4 crore in Q2 FY24 and a 3.2% rise from Rs 9,142.6 crore in Q1FY25.
Other Top Stories By Our Reporters
Aadit Palicha (left) and Kaivalya Vohra, cofounders, Zepto
Zepto in talks with Indian family offices to shore up another $100-150 million: Quick commerce firm Zepto has held discussions to raise another $100-150 million from a group of domestic family offices and high net-worth individuals (HNIs) at a pre-investment valuation of $4.6 billion, sources aware of the matter said.
ETtech Done Deals
Rajan Bajaj, founder, Slice
Slice raises $8.5 million from founder Rajan Bajaj: Fintech unicorn Slice has raised Rs 71.7 crore (around $8.53 million) from its founder and chief executive, Rajan Bajaj, through the issuance of partly paid-up shares.
Aditya Birla Digital Fashion invests Rs 75 crore in Wrogn: Aditya Birla Digital Fashion Ventures Ltd, a wholly owned subsidiary of Aditya Birla Fashion and Retail Ltd, has invested Rs 75 crore in Wrogn, the men’s wear brand backed by Accel and cricketer Virat Kohli.
Zomato to seek board nod to raise Rs 9,000 crore via QIP: Food and grocery delivery company Zomato will seek approval from its board of directors on October 22 to raise additional funds via the qualified institutional placement (QIP) route, the company said in a filing with the stock exchanges.
Investors leaving board was biggest setback; Byju’s now worth zero: founder Raveendran | Three of Byju’s key investors—Prosus, Peak XV Partners, and the Chan Zuckerberg Initiative—resigning from the board at the same time in 2023 was one of the biggest setbacks for the troubled edtech firm, making it impossible for the company to raise funds, founder Byju Raveendran said Thursday.
Google licenses AI model to Indian firms for early detection of diabetic blindness: With new partnerships in India and Thailand, Google aims to facilitate 6 million free AI screenings for diabetic retinopathy in underserved communities over the next decade. The AI model, which underwent early research and development (R&D) in India, has already supported more than 600,000 screenings in clinics worldwide.
Global Picks We Are Reading
■ JD Vance adviser posted on Reddit for years about use of cocaine, ‘gas station heroin,’ other drugs (Wired)
■ Y Combinator-backed fintech CapWay has shut down (TechCrunch)
■ Amazon finally has a colour Kindle, and it looks pretty good (The Verge)
