Ranjan Pai’s investment office, Claypond Capital, and Axis Bank are reportedly considering investing in the gold loan startup, Rupeek. This potential investment comes amidst discussions of a reduced valuation for the startup, with existing investors also contemplating selling shares. Rupeek, previously backed by Accel and Peak XV Partners, had raised funds from 360 One at a significant discount in its last funding round.
Partnership Discussions
Sources familiar with the matter reveal that discussions are underway between Claypond Capital, Axis Bank, and Rupeek regarding the investment. While talks with Axis Bank are still in the early stages, the new investor consortium is finalizing its plans. The investment round is expected to result in a valuation ranging between $200-250 million.
Claypond Capital’s Interest
According to sources, Claypond Capital, led by Manipal Group chairman Ranjan Pai, is exploring the possibility of investing in Rupeek. However, the exact amount of investment has not been finalized yet. The potential investment by Claypond Capital underscores growing investor interest in the gold loan segment.
Existing Investors’ Involvement
In addition to the prospective investment, existing investors of Rupeek are expected to sell shares as part of the funding round. This move indicates a strategic shift in the startup’s financial structure and investor composition.
Regulatory Impact
The potential down round at Rupeek comes amidst a slowdown in business and regulatory scrutiny in the sector. The Reserve Bank of India (RBI) has raised concerns over gold loan disbursals by banks through fintech partnerships. These regulatory challenges have influenced investor sentiment and the valuation of fintech startups.
Axis Bank’s Strategy
Axis Bank aims to deepen its integration with Rupeek to offer doorstep gold loan facilities to its customers. Similar partnerships between banks and fintech startups have gained traction in the market, driven by the growing demand for gold-backed lending solutions.
Market Dynamics
The gold loan market in India has witnessed significant growth, with outstanding loans surpassing Rs 1 lakh crore in March. However, regulatory interventions and changing market dynamics have posed challenges for players in the sector.
Startup Performance
Rupeek, founded in 2015, has raised approximately $164 million in funding from investors such as Accel and Bertelsmann. While the startup has seen a slowdown in disbursals, its asset quality has improved over time.
Industry Landscape
Rupeek competes with other gold loan startups like Indiagold and Oro Money in the fintech space. However, macroeconomic changes and realignment of valuations based on growth potential have impacted the valuation of venture-funded startups across various sectors.
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