The NBFC industry may be facing its worst liquidity crisis but trying explaining this to Sachin Bansal, who completely seems to be in a defiant mood. After backing strings of Fintech startups recently, Bansal has now infused funds in the Mumbai based Fintech startup U Gro. The Flipkart co-founder along with Poonawalla family has invested close to Rs 100 crore in U Gro.
The entire deal happened through two separate transactions. Firstly, Poonawalla Finance (part of the Poonawalla family) completed the securitization transaction with U Gro and later Bansal rounded up the non-convertible debenture deal.
Unlike other startups that dream about an IPO, U Gro is already a publicly listed company in BSE. Today it is among the strings of Fintech companies that wants to help India’s capital starved SMEs. The company was started by former Religare Finance CEO Sachindra Nath.
Bansal’s fresh investment in the Mumbai based NBFC company comes after he recently invested Rs 740 crore in the Bengaluru based microfinance company Crids. The investment marked Bansal’s comeback as a CEO, a role that he once wielded and executed in Flipkart – India’s homegrown e-commerce company.
But what is fueling Bansal’s Investment in Fintech startups
It is not merely Sachin Bansal who nurtures a special love for the Fintech sector. As a whole, the entire investment community has a special affiliation for this sector, which is witnessing a sort of revolutionary period owing to increasing smartphone and internet penetration.
Not surprisingly, the Fintech sector remains amongst the most well-funded and well capitalized industries of the country. Without any exaggeration, on an average at least one or two Fintech companies manage to raise capital every week.
Bansal and the investment community seems to be buoyed with the fact that there are 50 Mn small businesses across the country that are starving for short as well as long term capital. And with traditional banks still giving a cold shoulder to this supposedly lucrative market, Fintech companies have decided to jump on the bandwagon to seize the opportunity.
While no doubt that there is still lot of headroom in India’s Fintech sector but the challenge of expanding the loan book and remaining profitable at the same time won’t be an easy nut to crack. In other words, India’s NBFC companied will have to ensure that they don’t end up getting embroiled in the NPA mess; something that the Indian banking sector is currently acutely experiencing today.