Financing Startup Veefin Purchases 26% Stake in EpikIndifi Through a Share Swap Deal

BSE SME-listed fintech firm Veefin Solutions has acquired a 26% stake in EpikInDiFi in a share swap agreement valued at INR 125 Cr. This is the company’s third acquisition in three months.

Veefin plans to gradually grow its share in EpikInDiFi to 100% over the next two years, founders and COO Gautam Udani told the media.

As part of the arrangement, EpikInDiFi founders Rajendra Awasthi, Sushmitshri Babu, and Vaidyanathan Balasubramaniam would purchase interests in a Veefin subsidiary. However, Udani did not specify the quantity of stock or the name of the subsidiary in which the founders will invest. Additionally, Veefin intends to spend INR 25 crore in EpikInDiFi during the next two years.

Related: Fintech Startup Axio Secures 170 Cr from Amazon Smbhav VCF

EpikInDiFi, established in 2017, offers cloud-based fintech automation solutions to banks and financial institutions. It claims that its analytics-driven products, such as Business.ezee, Identity.ezee, Lend.ezee, and Collect.ezee, assist institutions in streamlining their processes, making better decisions, improving operational efficiency, and lowering non-performing assets.

Veefin, founded in 2020, offers white-labeled supply chain finance and lending solutions to banks and NBFCs, including an end-to-end lending stack, smart credit decisioning, business intelligence, digital identity verification, automated financial statement analysis, debt securitization, cash management, trade finance, automated accounts receivable and payable, and software consulting.

Its customers include Yes Bank, Jio Financial Services, IndusInd Bank, and Hero FinCorp. In its annual report for fiscal year 2023-24 (FY24), the company stated that one of its strategic targets for the coming year is to acquire companies with comparable products in transaction banking and digital lending.

Veefin’s acquisition of EpikInDiFi will help it generate new income streams by increasing its position in the personal loans, buy now, pay later, green loans, credit cards, mortgage loans, and SME loans areas. Veefin claims to have a strong position in the working capital solutions market.

Udani further stated that one of the reasons for the acquisition is that he believes EpikInDiFi’s product stack is slightly superior to Veefin’s loan origination system (LOS), and that it may have become a competitor for Veefin in the near future.

Veefin’s portfolio would be expanded by 50 banks and NBFCs following the acquisition. This will enable Veefin to cross-sell products from its other companies to EpikInDiFi customers.

“This has been a seminal year for the Veefin Group in building both in-house capabilities as well as leveraging inorganic growth opportunities to expand beyond supply chain finance and offer every single solution under the ambit of working capital finance to our Indian and global customers,” according to Udani.

It is worth noting that in June, Veefin purchased a 26% investment in Regime Tax Solutions, a company that specializes in advanced GST compliance, accounts payable (AP), and accounts receivable (AR).

Later in August, it paid an undisclosed sum to buy the Indian arm of global IT services giant Nityo Infotech Singapore.

According to Veefin, the total estimated spend for the first tranche of all three acquisitions in the last three months is INR 215 crore (cash and equity).

Veefin’s after-tax earnings increased by 49% to INR 5.63 crore in FY24, up from INR 3.78 crore the previous year. Revenue from activities increased 72% to INR 24.99 crore from INR 14.48 crore in FY23.

Veefin was launched on the BSE SME platform in July of last year, with a share price of INR82. Its shares closed Monday’s (September 16) trading session 2.8% lower at INR 682.55.