Singaporean Temasek’s Fullerton To Now Hold Lendingkart’s Controlling Stake

Fullerton Financial Holdings (FFH), a subsidiary of Singapore’s Temasek, plans to buy a controlling share in Lendingkart, a digital lending platform for SMEs.

The deal, which entails an investment of Rs 252 crore, is awaiting regulatory approval. Lendingkart hopes that the funding infusion will improve its technological skills and expand its reach into underserved communities across India.

FFH, which currently owns a 38% stake in Lendingkart, will achieve majority control through this transaction, albeit the actual proportion of ownership has yet to be published.

“Our investments in Lendingkart are a testament to our continued belief in the MSME opportunity in India and that well-governed, scalable franchises can bring significant value to small businesses,” Hong Ping Yeo, CEO of FFH, told reporters.

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The inflow of capital is expected to assist Lendingkart overcome its financial challenges and continue its aim of delivering simple finance solutions to small businesses across the country.

“This investment demonstrates confidence in Lendingkart’s capacity to alter the MSME lending market. Our goal is to recreate FFH’s previous success in the Indian financial market. “With FFH’s support, we hope to bring more small businesses into the formal lending ecosystem,” said Harshvardhan Lunia, founder and managing director of Lendingkart.

This new capital injection comes while Lendingkart is experiencing financial challenges. According to reports, the company’s valuation will be dropped drastically to roughly $100 million, down from $350 million in 2020.

Lendingkart had been pursuing $30-50 million in equity investment since last year, and the deal comes after months of struggle. As a result, the additional investment is an important step toward stabilizing the company as the unsecured credit market faces mounting hurdles.

Lendingkart, founded in 2014 by Harshvardhan Lunia, offers unsecured working capital loans to small and medium-sized firms (SMEs) in Tier 1, 2, and 3 locations. It operates through Lendingkart Finance Limited, a non-banking financial corporation (NBFC).

The organization has granted over 3 lakh loans worth Rs 20,000 crore, with an average loan value of Rs 7 lakh. In recent years, Lendingkart has increased its co-lending arrangements with other banks and NBFCs, resulting in an increase in Assets Under Management.

Despite revenue increases, the company has struggled to remain profitable. In FY24, Lendingkart’s standalone net profit fell to Rs 60 crore from Rs 116 crore the previous year.

The company also suffered increased credit costs due to asset quality difficulties, as the unsecured nature of its loans made collection more challenging.