BharatPe plans to raise $150-200 million in equity funding and around $500 million of debt, in the biggest fund-raise for the payments and alternative lending startup.
The company aims to raise the first tranche of about $100 million equity by March, chief executive and co-founder Ashneer Grover said in an interview, adding the debt will be raised over two years. The New Delhi-based company last raised nearly $75 million in February 2020 as part of a Series C round led by New York-based hedge fund Coatue Management and Palo Alto-based Ribbit Capital.
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The coming round could value BharatPe at $1 billion, a person aware of the fund-raise talks said on condition of anonymity, which would make it India’s seventh fintech unicorn. BharatPe was valued at $400 million in its last equity fund-raise.
The company will use the debt to bolster lending operations with new products and enter new retail segments.
“We are more excited about the debt we are raising from international banks and financial institutions, as we look to create an India-focused credit fund. Fintech is moving towards lending and debt will become much bigger than the equity market,” Grover said. He did not comment on the expected valuation.
This month, BharatPe plans to launch its wholesaler financing product ‘BharatPe DtoR’, which stands for distributor to retailer.
The company will underwrite wholesalers and extend them a credit line, which distributors can offer to their end-retail partners and kirana owners.
The average ticket size of the credit line to distributors is expected at around ₹50 lakh, with retailers permitted loans up to ₹1 lakh for 30 days. Grover said the $500 million debt raised will be deployed through other non-banking financial companies (NBFCs), which might lend to BharatPe’s merchant base, along with other fintechs which do not directly compete with the startup. The company has already raised $40 million of the total debt funding.
BharatPe, whose application to become an NBFC was rejected by the Reserve Bank of India (RBI) last year, continues to partner with NBFCs to deploy capital to its merchant base for its lending operations.
“Most of the players in the market go to raise equity and we are in a situation where we have 24 months of capital runway, considering our burn rate. We will continue raising equity and debt towards our lending business,” added Grover.
BharatPe’s burn rate remains below $3 million a month, Grover said, adding that the company still hasn’t utilized the funds from the previous funding round.
Last month, BharatPe teamed up with Centrum Group to submit a joint expression of interest (EoI) to the Reserve Bank to take over the distressed assets of Punjab and Maharashtra Cooperative (PMC) Bank.
“BharatPe is cornering equity at present to give to depositors, and clean the legacy (earlier mess) from the (PMC) bank. Considering Centrum and BharatPe’s experience, the entities will rebrand and turn the bank into a digital-first entity. Right now, for PMC, RBI has three options—either accept the bids, shut the bank or merge it with an existing entity. It will be clear by March as what the future for PMC Bank holds,” said a second person aware of BharatPe’s plans.
Grover declined to comment on the partnership with Centrum Group and its plans on the takeover.
In November, the company reached an annualized total payment value (TPV) of $7 billion, crossing its fiscal target for FY21. On an average, it disburses nearly ₹100 crore worth of loans every month.