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Kunal Shah’s Cred in talks for $100 million from Hillhouse, others

Top funding deals in the works in startupland Sequoia and other existing investors likely to lead new round, valuing the firm at $400 million

Updated: Apr 15, 2019, 09.13 AM IST
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Cred targets the country’s small, but lucrative, credit card market which is currently dominated by a handful of banks.
MUMBAI | BENGALURU: Cred, the Kunal Shah-founded financial technology platform, is in talks with China’s Hillhouse Capital and some of its existing investors to raise $100 million (Rs 692 crore), two people in the know said.

The deal, if it goes through, will likely value the six-month-old financial technology platform at $400 million after the investment, compared with $75 million when it first raised capital last year, they said.

Existing shareholder Sequoia Capital is expected to lead the funding round, with Yuri Milner-backed Apoletto Asia and Ribbit Capital also doubling down, said the people. Hillhouse, an early backer of Chinese technology major Tencent and e-commerce firm JD.com, would be a new investor.

“The company has received term sheets and the due diligence process is underway. The round is likely to close soon,” said one of them.

Shah, who had founded mobile-recharge platform FreeCharge that he sold to Snapdeal in 2015, did not comment on the development when ET contacted him. Hillhouse Capital’s spokesperson did not respond to an email seeking comment till press time Sunday.

Hillhouse is one of Asia’s largest investment firms and raised $10.6 billion last year for its latest fund. In India, it has backed companies like food-delivery firm Swiggy, auto classifieds portal CarDekho and Hector Beverages that makes the Paper Boat brand of juices.

“Hillhouse will likely pick up a small stake with Sequoia taking the lead,” said the other person. Sequoia currently holds more than 15% of Cred.

Kunal-Shah-story

The deal could ratchet up Cred’s valuation fivefold from its previous funding round. It would also be among the fastest valuation scaleups for a domestic startup. In recent times, early-stage companies like business-to-business e-commerce platform Udaan, now a unicorn, and vernacular social network ShareChat, valued at $460 million, have seen a rapid expansion in valuations. ET had reported in its March 20 edition that Cred was in the process of scooping up $75-100 million at a valuation of $400 million.

Cred targets the country’s small, but lucrative, credit card market which is currently dominated by a handful of banks.

Cred helps users pay their credit card bills through an app, and get a slew of rewards. India is primarily a debit card-driven market — about 944 million debit cards against 46 million credit cards — as per central bank data.

During earlier interactions with ET, Shah had said Cred was targeting the top layer of Indian consumers. The idea is to connect such consumers to potential businesses through targeted marketing offers. Cred has tie-ups with large merchants who run specialised offers on the app to attract the consumers with a credit card.

“In the long run, Cred may enter the broader credit card market which is underpenetrated. With high-quality data that the company is collecting, they will be in a position to disrupt the credit card business directly,” said a top executive in the payments industry.
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US venture firm General Catalyst may invest in Cred in its first India bet

Cred plans to raise another $100 million in new funds

Cred is testing UPI, may go live in a month

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