New Delhi : E-commerce marketplace Snapdeal has acquired a majority stake in digital financial distribution platform RupeePower for an undisclosed amount.
Snapdeal’s entry into online financial services is a first for an e-commerce company in India. Following the deal, the SoftBank-backed Snapdeal will offer consumer loans through the RupeePower network. The online financial services market in India is estimated at Rs 4,500 crore.
The size of the cash-and-equity deal was not disclosed, but sources said it could be around $50 million (Rs 300 crore). The latest development is part of Snapdeal’s $1-billion acquisition spree. It recently bought luxury fashion portal Exclusively and made a strategic investment in logistics firm GoJavas.
Founded in 2011, RupeePower has partnered 12 banks, including the State Bank of India, and non-banking financial companies. This network will be expanded after the acquisition. RupeePower does not lend on its own. The platform will have financial services such as personal loans, educational loans, credit cards, automobile loans, home loans, and extended warranties. RupeePower has disbursed loans worth Rs 1,500 crore, but Snapdeal co-founder and chief executive officer (CEO) Kunal Bahl said he was looking at Rs 6,000-crore lending in 24 months. For every loan to be processed through Snapdeal, banks and finance companies will have to pay a commission, which sources say will be three to four per cent of the loan.
RupeePower co-founder and CEO Tejasvi Mohanram said these loans would be from Rs 30,000 to Rs 3 crore. Mohanram has a team of 40 people, which is expected to be 200 by the end of this year.
“More liquidity will create demand and, thus, supply. This is a step in that direction. The potential is huge, as we are looking at over Rs 6,000 crore in two years,” Bahl said. The customer base of Snapdeal would be an advantage and the research on consumer buying patterns would help assess credit worthiness, he added. Snapdeal has 40 million active users.
“The share of digital origination of credit is poised to grow from 7.5 per cent to 40 per cent over four years in a Rs 400,000-crore ($67 billion) retail credit market, growing at 20 per cent annually. With this investment, and by partnering Snapdeal, we aim to become the number one originator of financial products over the next couple of years. Our emphasis will be on making RupeePower the top matchmaking platform between lenders and borrowers,” Mohanram said.