Warburg Pincus in talks to buy stake in Capital Float
Global private firm Warburg Pincus LLC is in advanced talks to lead the next round of funding in online credit platform Capital Float, run by Zen Lefin Pvt. Ltd, according to a three people aware of the ongoing discussions.
“Currently, Warburg is looking to invest up to $75 million in Series C funding in Capital Float although the final figure as well as the terms of investment could change as the discussions are yet to conclude,” said one of the three persons, who requested anonymity because the talks are private.
For Warburg Pincus, which also bought close to 65% in Future Capital Holdings (since renamed Capital First), a listed non-banking financial company (NBFC), from Kishore Biyani in 2012, the move to buy a significant stake in Capital Float is part of a strategy to diversify the company’s loan book, the people aware of the matter said.
“Under Future group, Capital First started as a provider of unsecured business loans and loans against property but once Warburg took over, the NBFC has focused more on the retail segment such as consumer durables loans and two wheeler loans,” the second person said.
“Warburg feels that Capital Float will be a good fit to Capital First’s current portfolio,” the second person added.
A Warbug Pincus spokesperson declined to comment.
“We are currently focused on growing the business, and are not actively fund-raising at this time. Our Series B funds raised earlier this year are being deployed in growing loan originations, investing in our technology platform, and expanding our footprint across the country,” Capital Float said in an email response.
Founded in 2013 by Sashank Rishyasringa and Gaurav Hinduja, Capital Float has disbursed loans amounting to over Rs400 crore till date.
It underwrites unsecured loans online to start-ups, business-to-business (B2B) firms, small manufacturers and e-commerce merchants through its own books.
The company has partnered with e-commerce players, mobile wallets, taxi hailing services—including Snapdeal, Shopclues, Paytm and Uber, among others—to offer loans to a large pool of small businesses and merchants who work with these firms.
The latest round of funding comes soon after the company raised $25 million in a series B round in May. The round was led by led by Creation Investments Capital Management LLC, which saw participation from existing investors that include Sequoia, Aspada and SAIF Partners. It was the third round of funding for the company, which has raised $42 million so far. It raised $13 million in Series-A funding in February.
Warburg-controlled Capital First Ltd (CFL) has three main businesses—Capital First Commodities Ltd, Capital First Home Finance Ltd and Capital First Securities Ltd. At the end of FY16, CFL had assets under management (AUM) of Rs16,103 crore.