Cred invests $10 million in P2P lending platform LiquiLoans

Fintech startup Cred will invest $10 million to acquire a minority stake in peer-to-peer (P2P) non-bank financial firm LiquiLoans, the two companies announced on Friday.

Cred will take around 5-6% of the company, valuing it at around $200 million.

The cycle is a mix of primary and secondary capital, sources familiar with the discussions told ET. The deal will give LiquiLoans’ first angel investors an exit.

The transaction is expected to close within the next three to four weeks, the people quoted above added.

Last August, the Kunal Shah-led company partnered with LiquiLoans to enable P2P lending to users through the launch of a new investment product, Cred Mint.

The offering allowed Cred users to “invest” their savings in a capital pool, which would be used to lend to customers seeking personal loans on the platform.

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Those investing in the product would earn around 9% interest, while loans would be disbursed at 12-13%, Shah told ET last year.

LiquiLoans, which says it has been profitable since inception, will explore a strategic relationship to bolster its technology capabilities, as part of the deal.

“We’ve traditionally stayed away from funding. So everything we’ve built is with limited funding. Cred is an ambitious brand (to many) in terms of consumer-facing design and technology. With this round of funding, we will get access to mentorship from their senior leadership (from Cred) on how to build a tech stack and scale the infrastructure,” LiquiLoans co-founder Achal Mittal told ET in an interaction.

Achal Mittal, co-founder of LiquiLoans, told ET in an interaction. Currently, LiquiLoans is also partnering with Cred on its line of credit product, Cred Cash.

Founded in 2018 by Mittal and Gautam Adukia, LiquiLoans is a lending platform that uses technology to match borrowers and lenders. In the process, it eliminates the margins charged by traditional banks and NBFCs.

In January 2019, the company raised $1.68 million (about Rs 12 crore) in its pre-Series A round, led by Matrix Partners. Shah also participated in the tour.

“Liquiloans has pioneered the creation of trust-based financing products and is a leader in peer-to-peer lending with a strong management team. Their work has helped expand access to credit, and we look forward to partnering with them in their next phase of growth and innovation,” Shah said.

In June, according to regulatory documents filed with the Ministry of Corporate Affairs, Cred raised 617 crore rupees (about $80 million) in the first tranche of its latest funding round.

The company told ET it is raising $140 million in a mix of primary and secondary deals, which would value it at around $6.4 billion.

Singapore’s GIC led the round, with participation from existing investors Sofina, Tiger Global, Falcon Edge and Dragoneer.

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